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Asian Markets Negatively Affected by US Port Shutdown - 2002-10-04

Major Asian markets came under heavy pressure this week, with Hong Kong, Taipei and Tokyo hitting new lows.

Concerns over the shutdown of U.S. West Coast ports swept through Asian markets this week, as the major exporting economies of Hong Kong, Taiwan, Singapore, South Korea and Japan were badly affected. The U.S. labor dispute has stranded container shipments to the United States for several days now, and economists say a prolonged closure would have a devastating impact on Asia's export sector.

But shares of some of the region's airlines surged Friday, as exporters sought alternative shipping methods. South Korea's Asiana Airlines gained 1.4 percent, Korean Air surged 6.7 percent, and Taiwan's China Airlines closed half a percent higher.

In Taiwan, uncertainty over the strike and gloomy global electronics forecasts pushed shares of semi-conductor companies down, dragging the benchmark TAIEX to an 11 month low. The index closed at just over 4,000, down 3.35 percent for the week.

James Huang, an electronics analyst from National Securities in Taipei, says soft demand in electronics will continue to spook investors in the next few months.

"If the U.S. market, from the client side, does not see demand pickup, the order flow will remain weak," he said. "So, it might continue the selling pressure."

Expectations of tougher financial reform measures triggered selling in Japanese bank stocks this week. The benchmark Nikkei 225 stock average recovered slightly Friday, after hitting a 19-year low in mid-week.

Telecom giant NTT DoCoMo rose strongly on Friday, though, after U.S. investment bank Morgan Stanley upgraded its rating on the stock. NTT DoCoMo jumped 9.4 percent, its biggest gain since January 2001.

The Nikkei closed Friday at 9,027, down 5.27 percent for the week.

In Hong Kong, the Hang Seng Index closed just above 9,000 Friday, after hitting a 12-month low on Thursday. Analysts say investors are worried that, as the economy continues to slump, there will be new pressure on the government to break the peg between the Hong Kong and U.S. dollars. Foreign exchange traders say some investors are betting on just that, speculating on a weaker Hong Kong dollar a year from now.