Strictly: Drilling

[Croesus I]

To:t4texas who wrote (14091)
From: t4texas Saturday, Jun 8, 2002 12:36 PM
Respond to of 14095

fyi on japan input
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%...
Japanese Stocks May Drop; Hong Kong, Korea Seen Down: Outlook
By Michael Tsang


Tokyo, June 8 (Bloomberg) -- Japanese stocks may fall next week, led by retailer Ito-Yokado Co. and other companies that rely on domestic sales, on concern a recovery in the world's second- largest economy may not be strong enough to bolster profit.

``The economy still lacks the strength to make me confident about investing in domestic-related stocks,'' said Hideki Kamiya, who manages $80 million at Asahi Tokyo Investment Trust Management Co. He favors small and medium-sized companies that have shown strong earnings outlooks, such as underwear maker Gunze Ltd.

Exporters such as Sony Corp., Canon Inc. and Sharp Corp. may drop on expectations a U.S. retail sales report due June 13 will show consumers in their biggest market are spending less.

Elsewhere, Hong Kong stocks may drop on anticipations the city's companies may post lower profit growth than elsewhere in the region. Samsung Electronics Co. may lead South Korea's chipmakers lower on concern demands for chips and computers are slowing.

Markets in Australia are closed for a national holiday on Monday, the Philippines will be closed Wednesday and South Korean markets are shut Thursday.

U.S. stocks dropped on Friday after semiconductor maker Intel Corp. cut its sales forecast, sending the Dow Jones Industrial Average to its lowest close since Nov. 12. Benchmark indexes in the U.S. slipped for a third week.

In Japan, the government said the economy grew 1.4 percent in the first quarter as exports rose at the fastest pace in 21 years. Even as officials said the worst of the recession is over, spending on factories and equipment fell 3.2 percent after dropping 12 percent in the fourth quarter. That's raised concern the economy may shrink again later this year.

`Difficult'

``Right now it's difficult to see how the Japanese economy can support itself,'' said Hajime Yagi, who helps manage about $1 billion in Japanese stocks at Meiji Dresdner Asset Management Co.

That may prompt overseas investors to sell companies that depend on domestic sales such as Ito-Yokado, Japan's largest retailer, and Nomura Holdings Inc., the nation's No. 1 brokerage.

Mizuho Holdings Inc. may lead other banks lower on concern the slumping economy will make it more difficult for borrowers to repay their debts. Standard & Poor's Corp. said on Thursday that Japanese banks have as much as 150 trillion yen ($1.2 trillion) in problem loans.

``I want to avoid banks because at the end of the day, their bad loans and management problems still remain, in spite of optimism about the economy,'' said Yukihisa Sanada, who helps manage 10 billion yen at UAM Japan Inc. His holdings in automakers and computer-related stocks are below the Topix's 9.2 percent and 16.5 percent weightings, respectively.

Hong Kong, Korea

Cheung Kong (Holdings) Ltd. may lead Hong Kong's Hang Seng Index lower on concern corporate profit growth in Hong Kong may be lower than South Korean and Taiwanese companies.

With unemployment at a record, stalled consumer spending will delay a rebound in Hong Kong's economy and corporate earnings. Morgan Stanley Dean Witter Asia Ltd. expects average corporate earnings to increase 10 percent this year in Hong Kong, compared with a 50 percent to 60 percent growth in Korea and Taiwan.

``If you look at the 33 members in the index, you're not going to see a big upside surprise,'' said Peter Churchouse, advisory director at Morgan Stanley Asia Ltd. ``It's not a robust growth story here.''

Investors may steer away from Samsung Electronics Co. and other computer-related shares on signs that overseas demand for chips and computers isn't recovering as quickly as expected.

The Kospi on Friday fell to its lowest close in more than three months, led by Samsung Electronics, after Intel Corp. lowered its sales forecasts. Separately, the Semiconductor Industry Association this week cut this year's chip-industry growth forecast by almost half.

Late Recovery?

``The market consensus is leaning toward the U.S. market recovering later than anticipated,'' said Lee Young Seog, who manages about $450 million at Dongwon BNP Investment Trust Management Co. in Seoul. ``The market is in a downward turn and there is nothing in view that will change that momentum.''

Some investors in Taiwan say the pessimism isn't warranted.

``Electronics stocks should have a chance to rise,'' said Lin Che-cheng, who manages $97 million in stocks at Capital Trust Investment Corp. ``Every one is pessimistic about the third quarter, the way they were over-optimistic about the first and second quarters.''

Hon Hai Precision Industry Co. may gain as the island's largest computer-parts maker may forecast on Monday that sales will rise this year because of an addition of new customers and products such as mobile phones and game consoles.

Singapore, Australia

In Singapore, where citizens can use about three-quarters of their retirement savings to buy homes, property stocks including City Developments Ltd. and CapitaLand Ltd. may extend declines. The government may announce plans to limit the use of pension funds for home purchases as early as next week.

``We don't see a recovery in the property sector so soon because of concerns over unemployment and limiting the use of pension funds is going to hurt sentiment,'' said Tan Yuh Harn, who helps manage about $2 billion of assets in Asia excluding Japan, at SGY Asset Management Ltd. in Singapore.

National Australia Bank Ltd. and the nation's other lenders may gain as the government may report that home loan approvals rose 1 percent in April. The Reserve Bank of Australia on Wednesday raised its benchmark interest rate for the second time in a month to cool a housing boom and consumer demand.

As the economy continues to expand, ``we should see a rotation away from consumer lending toward the business sector lending,'' said Tom Murphy, head of investment research at Deutsche Private Banking in Sydney. ``We should see continuing improvement in the quality of banks' earnings.''