May 10 (Bloomberg) -- Asian stocks fell the most in a month after a
drop in the dollar raised concern that the value of overseas revenue
at exporters such as Honda Motor Co. and Samsung Electronics Co. will
decline.
``The dollar's slide is the biggest reason making investors bearish
and pushing shares lower,'' said Naoki Fujiwara, who oversees about
$172 million in Japanese equities at Shinkin Asset Management Co. in
Tokyo. ``People are worried that further declines in the currency
will reduce corporate earnings.''
The Morgan Stanley Capital International Asia-Pacific Index dropped 1
percent to 141.66 as of 2:19 p.m. in Tokyo, heading for its biggest
decline since April 12. All but one of its 10 industry groups fell.
Japan's Nikkei 225 Stock Average slipped 1.6 percent to 16,921.57,
the biggest slide in the region. The broader Topix index lost 1.5
percent.
Taiwan's Taiex retreated 1.2 percent after the central bank indicated
it may raise interest rates further. Share indexes fell elsewhere in
the region except in Australia, New Zealand, China, India, Indonesia
and the Philippines.
Asian commodity producers gained, led by BHP Billiton and Inpex
Holdings Inc., after metal prices rose to records and crude oil
climbed above $70 per barrel.
Australia's S&P/ASX 200 Index jumped 0.6 percent, set to close at a
record, helped by income tax cuts and measures to boost pension
savings that the government announced yesterday.
`Difficult'
Honda, Japan's third-largest automaker, dropped 1.7 percent to 8,100
yen. North America accounted for most of Honda's sales last year.
Canon Inc., the world's biggest digital camera maker, fell 0.7
percent to 8,550 yen. Samsung Electronics Co., South Korea's largest
electronics maker and exporter, lost 0.8 percent to 656,000 won.
The dollar was at 111.14 yen from 111.04 yesterday, when it slid to
110.88, its lowest since Sept. 16. Against the won, the dollar lost
as much as 0.3 percent, extending yesterday's 0.5 percent decline.
Companies such as Lotte Shopping Co. that do much of their business
at home gained as some investors shifted money away from exporters.
Lotte, South Korea's largest department store operator, added 1.6
percent to 378,000 won.
``Investors are focusing on domestic-demand related stocks and
avoiding exporters because of the stronger won,'' said Song In Ho,
who manages $425 million at Kyobo Investment Trust Management Co. in
Seoul. ``It is difficult to make large bets on exporters until the
currency stabilizes.''
Taiwan
Taiwan's Taiex was set for its biggest drop since March 14 on concern
the island will keep boosting borrowing costs. Taiwan has raised
interest rates seven times since September 2004.
Rates ``are still some distance away from what I'll call a neutral
rate,'' Central Bank Governor Perng Fai-nan said yesterday after the
market closed.
Taiwan Semiconductor Manufacturing Co., the world's biggest supplier
of custom-made chips and the island's biggest stock, fell 3.4 percent
to NT$65.70. Hon Hai Precision Industry Co., Taiwan's largest
electronics exporter, declined 0.7 percent to NT$226.50.
``Taiwan's central bank is likely to continue to raise rates,'' said
Tom Fu, who manages $70 million in assets at PCA Securities
Investment Trust Co. in Taipei. ``Rate hikes will help ease inflation
worries, but will also hurt investor confidence.''
Copper Advances
Mining shares advanced. Australia's BHP, the world's biggest mining
company, added 2.2 percent to A$31.68. Rio Tinto Group, the third
biggest, rose 1.6 percent to A$85.87. Jiangxi Copper Co., China's
largest listed copper producer, added 0.6 percent to HK$9.20 in Hong
Kong.
A measure of six metals traded on the London Metal Exchange climbed
2.5 percent, with copper rising 2.4 percent to a record. Zinc also
touched an all-time high, while gold surged above $700 an ounce in
New York for the first time since October 1980.
Shares in Australia also got a boost after the government yesterday
said it will reduce income taxes by about $28 billion in the next
four years by cutting the highest tax rate to 45 percent from 47
percent. The reduction in taxes for the nation's highest income-
earners is the first in 16 years.
``It's unambiguously positive for the share market,'' said Shane
Oliver, who oversees $64 billion at AMP Capital Investors in Sydney.
``The government has taken some radical steps. The tax cuts were
substantial.''
Elsewhere, South Korea's Hynix Semiconductor Inc., the world's second-
largest maker of memory chips, slumped 3.5 percent to 31,700 won as
the company and its creditors began preparations to sell shares and
convertible bonds worth as much as $2.9 billion.
To contact the reporters for this story:
Michael Tsang in Tokyo at [EMAIL PROTECTED];
Darren Boey in Hong Kong at [EMAIL PROTECTED]
Last Updated: May 10, 2006 01:27 EDT
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