The debut of the euro drove
down Asia's two biggest share markets on Monday, with prices
dropping three percent in Tokyo and more than two percent in
Most other markets in the region kicked off the New Year on
a more confident note, especially Seoul, which surged 4.5
Traders in Tokyo said that with euro trading officially
beginning on Monday, concerns about currency market volatility
and views that the yen may firm further against the dollar had
battered stock market sentiment.
Tokyo's benchmark Nikkei average dropped 3.08 percent to
close at 13,415.89.
"There are worries that the yen will rise further against
the dollar in line with the birth of the euro," said Kazue
Mayuzumi, deputy chief operating officer at Nikko Securities.
"The dollar's slide below 115 yen would be a big negative
factor for Japan's exporters," Mayuzumi said.
The U.S. dollar dropped near a three-month low at 112.79 yen
before climbing back to around 113.50/60 by late afternoon in
The euro began trade at $1.1747 at 5:00 a.m. in Sydney (1800
GMT), and rose as high as $1.1913 in early European deals. By
0930 GMT, the currency was trading around the $1.18 level.
Tokyo's weakness hit Hong Kong shares, and the Hang Seng
index fell 2.38 percent to finish at 9,809.17.
Hong Kong brokers said investors were staying on the
sidelines waiting for the response of European markets to the
launch of the euro, which began trading smoothly in Sydney.
South Korea's composite index performed strongly and jumped
4.46 percent to close at 587.57.
Brokers said optimism about an economic turnaround had
lifted the market. Players also saw hope for an extended rally
after news that Moody's Investors Service may upgrade foreign
currency debt ratings of Korea Electric Power Corp, they said.
Australian shares ended 0.68 percent higher at 2,832.6.
"There certainly seems to be a bit of a drive towards the
stocks that provide a bit of certainty at the moment," said
Steve Mayne, a dealer at Macquarie Nevitts, who noted that
heavyweight shares had performed better than smaller issues.
In Singapore, the Straits Times Index closed 0.53 percent up
Electronics and property shares led the volumes as weekend
news of a local bank's rate cut, and a takeover offer for
Electronics Resources encouraged retail investors.
The Malaysian market, boosted in the last days of 1998 by
institutional investors, dropped heavily when those institutions
stood back on Monday.
Kuala Lumpur's composite index tumbled 4.18 percent to
finish at 561.65.
Philippine stocks closed higher, with the 33-share composite
index ending 0.61 percent up at 1,980.70.
"The good news is the peso is getting stronger," said
Russel Ong, analyst at Anscor-Hagedorn Securities Inc. The peso
closed trading on Monday at 38.57 to the dollar, up from a
previous close at 39.09.
In Indonesia, concern over the country's political
uncertainty helped send the key index down 1.01 percent to
finish at 394.01.
Thousands of Indonesian troops clamped down on the
rebellious province of Aceh on Monday after a weekend of
violence in which security forces were reported to have shot
dead nine civilians.
Thailand's composite SET index finished up 0.24 percent at
Shares in Bombay ended off their best, although the share
index was still 2.03 percent higher at a provisional 3,122.44.
Stock markets in New Zealand and Taiwan were closed on
Monday. Both will resume trade on Tuesday.