[CANSLIM] Asian Shares Fall Hard

From: John Kruger <jokguger@yahoo.com>
Subject: [CANSLIM] Asian Shares Fall Hard
Date: Sun, 7 Oct 2001 20:46:13 -0700 (PDT)
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SINGAPORE (Reuters) - Asian shares fell hard on Monday while oil prices
rose moderately as traders and investors priced in the risk that
U.S.-led strikes against Afghanistan (news - web sites) mark the
beginning of a protracted war.

The traditional safe havens of gold and the Swiss franc also rose
slightly, as did short-dated bonds in some markets, but the absence of
a lead from Wall Street made many reluctant to carve out big positions.

``We don't know how long the strikes will take. The market is concerned
about the possibility of retaliation from the terrorists, you don't
know how they will retaliate,'' said Allan Araullo, vice president of
Regina Capital Development Corp in Manila, where shares fell 3.84
percent.

``It's the same reaction all over the region,'' he added.

With Tokyo closed for a national holiday, Hong Kong's hang Seng Index
dropped 3.30 percent in early trading to 9,938.63 and Singapore's
Straits Tines Index fell 3.29 percent to 1,339.83 at 11 p.m. EDT
Sunday.

The sell-off followed a wave of bombing and missile strikes by the
United States and Britain to cripple the military of Afghanistan's
ruling Taliban, which has been sheltering Osama bin Laden (news - web
sites), accused of masterminding the deadly September 11 suicide plane
attacks on New York and Washington.

``It is not such a shockingly unexpected event that it will put markets
into disarray, but how it unfolds over the next few days will be key,''
said Anthony Karydakis, senior financial economist at Banc One Capital
Markets in Chicago.

He expects major stock markets worldwide to weaken, with the Dow Jones
industrials on Monday selling off by 200 or 300 points, or about three
percent, at the opening.

STORM BREAKS

U.S. stock futures weakened in electronic trading in Chicago, with the
lead month December Standard & Poor's 500 stock index contract falling
6.80 from Friday's 1,071.80 settlement. The December Nasdaq 100
contract fell 10.00 to 1,270.50.

Despite the initial sell-off, some brokers said the use of force
against Afghanistan had at least ended the markets' tense, uncertain
wait since the September 11 attacks.

``The markets have been nervous for almost a month, anticipating war,''
said Mak Hoy Kit of KAF Seagroatt & Campbell in Kuala Lumpur, where
shares fell 1.46 percent. ``Now that it's finally happened, it's
actually a relief but definitely investors here will cut back ahead of
U.S. markets tonight.''

U.S. bond markets will be closed on Monday for the Columbus Day
holiday, but stock markets will be open.

Although the bursting of the gathering storm clouds brought relief of
sorts, inherent uncertainty over the strength of the downpour left
analysts unsure of the direction markets will take.

``I don't think there's too much to surprise for markets but the
question for most is what are we in for, and that's not very clear,''
said David Gilmore, partner at Foreign Exchange Analytics in
Connecticut.

``This action will most assuredly prompt more terrorist attacks ahead,
and I'm not sure how society and markets are positioned to cope with
that,'' he said.

The dollar dipped below 120 yen to 119.90 about 2/3 of a yen below New
York's close on Friday, although dealers said the move was largely a
mark-down, driven by anticipation that risk-averse Japanese investors
will repatriate funds, rather than a product of active selling.

The Swiss franc firmed to 1.6110 per dollar from 1.6162 late in New
York on Friday, drawing strength from its traditional status as the
safest of safe havens.

OIL RISES

Gains in gold, another safe haven, were equally measured. Bullion was
quoted around $292.50/3.00 an ounce, up around $1.50 from late New York
levels on Friday.

Oil prices rose, though again only modestly, as traders fretted that
the violence could spread to the Middle East region, where two-thirds
of the world's petroleum reserves lie.

``With these strikes in Afghanistan, we've now seen one layer of
uncertainty peeled away. The strikes were strongly signaled, it was
only the timing that was the issue,'' said Simon Games-Thomas at NM
Rothschild & Sons in Sydney.

``What happens now (to oil) depends on the depth and breadth of the
strikes and the response they engender,'' he said.

The U.S. November crude futures contract jumped as much as 46 cents in
early NYMEX electronic trading on Monday before retreating to $22.71
cents a barrel at 10:43 p.m. EDT Sunday, a gain of 35 cents from
Friday's close in New York.

When U.S. bond markets resume trading on Tuesday, analysts said demand
for short-dated paper may push the yield on the two-year Treasury note
down to as low as 2.5 percent from 2.7 percent at Friday's close.

Treasuries have rallied through most of the year as the Federal Reserve
(news - web sites) has lowered interest rates nine times since January
to try to prop up a rapidly weakening economy that most analysts assume
has now tumbled into recession as a result of last month's attacks.

A day before the strikes on Afghanistan, finance ministers and central
bank governors of the Group of Seven leading industrial nations
acknowledged that the attacks had hurt the global economy and pledged
to keep financial markets stable.

``We are strongly committed to bringing forward needed measures to
increase economic growth and preserve the health of our financial
markets,'' the United States, Britain, Canada, France, Germany, Italy
and Japan said in a statement.

In Asia, South Korea (news - web sites)'s central bank made a similar
pledge on Monday, promising to provide ample liquidity in case of
wayward moves in the financial markets.

In the event, Seoul's benchmark Kospi stock market index fell just 0.69
percent to 498.45, while bond prices moved lower on fears of the
inflationary impact on rising oil prices on Korea, which imports all
its oil.

``The assault came as no big surprise and investors are trying to gauge
the impact,'' said Joh Jae-young, a fixed-income strategist at Kyobo
Securities in Seoul. 


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