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Asian Stocks Give in to Pressure From Wall Street - 2002-07-19

Stock markets in Asia gave in to pressure from Wall Street, and fell this week. Technology and electronics shares were particularly hard hit. Some analysts are blaming the losses on profit-taking after gains early in the week.

Japanese shares reversed two days of gains on Friday. The Nikkei ended sharply lower at 10,202, down almost four percent from a week ago.

The yen's strength against the weak dollar is making Japan's exports more expensive, which hurt the shares of many exporting companies. The yen's strength also raises concerns that the Bank of Japan will intervene in the foreign exchange markets.

Analyst Rajeev Gupta, with Goldman Sachs in Hong Kong, said investors also are dumping expensive Japanese electronics and technology shares in favor of similar companies elsewhere in Asia. "When revenues are diminishing, people find it harder to justify those valuations. Also, you've got Korean companies, Taiwanese companies and Hong Kong, China companies, which are taking market share away, which is not helping," Mr. Gupta said.

Taiwan's technology-heavy index ended the week down about five percent from last Friday. The Taiex closed at 5,161.

South Korea's Kospi index also sank nearly five percent from last week. It finished Friday at 754. After announcing better than expected earnings, Samsung Electronics was down four percent on profit-taking.

"If you look at Samsung over the last 12 months, it's more than doubled as a stock, so investors have made a lot of money. People are starting to get a little bit concerned about the strength, in seasonality with the third and fourth quarter, which is why you've seen profit-taking across the board in Asia today," Mr. Gupta said.

Hong Kong' Hang Seng Index did not escape sell-off. It dropped three percent below last Friday's end, to close at 10,325 this week.