Asian tech gains ease China rate concerns

A strong weekly performance for Asian stocks came courtesy of the region’s technology sector following robust earnings reports from several US tech bellwethers.

Asian indices lost ground on Monday and Tuesday before fighting back over the remaining sessions of the week. Monday’s losses followed China’s decision to raise the reserve requirements for its banks to help tackle inflation, while Tuesday’s decline was the result of a warning by Standard & Poor’s, the rating agency, on its long-term outlook for US debt.

Semiconductor stocks received conflicting messages from the US this week. Texas Instruments reported a downbeat outlook on Monday after the US close, while a day later market bellwether Intel reported forecast-beating first-quarter results.

Over the week, Asian chip stocks were broadly higher. South Korea’s Hynix Semiconductor gained 7.2 per cent over the five sessions to Won36,600, while domestic rival Samsung Electronics climbed 1.8 per cent to Won904,000. Although it announced it was to sell its hard-disk drive business to Seagate Technology of the US, Samsung’s performance was hampered by an acrimonious exchange of patent lawsuits with Apple, its largest client.

In Japan, Toshiba added 6.2 per cent to Y428 and chip testing company Advantest added 1.4 per cent to Y1484. Taiwan Semiconductor Manufacturing Co gained 2.5 per cent to T$70.90.

LG Display climbed 11.5 per cent over the week to Won40,450 in spite of posting its second-successive quarterly loss. The LCD screen maker, however, said panel shipments in the second-quarter would rise by a late teen percentage from its first-quarter performance.

But not all technology groups were supported. In Taiwan, computer manufacturer Acer fell 7.4 per cent to T$51.10, having hit its lowest level in more than two years, after reporting a 10 per cent decline in second-quarter shipments.

TDK, the maker of electronic components, shed 8.9 per cent to Y4070 after Goldman Sachs cut its target price, citing the potential loss of business revenues if Samsung were to sell its hard disk drive operations to Seagate. TDK is Samsung’s exclusive supplier of HDD heads.

Over the week, the FTSE Asia Pacific index climbed 2.1 per cent to 268.2, after hitting a two month closing high on Thursday.

Among the best performing indices in the region this week were Taiwan’s weighted index, which climbed 2.9 per cent to 8,969.43, South Korea’s Kospi, up 2.7 per cent to 2,197.82 and Australia’s S&P/ASX 200, which gained 1.3 per cent to 4,913.8. India’s BSE Sensex added 1.1 per cent to 19,602.23, while Japan’s Nikkei 225 Average gained 0.9 per cent to 9,682.21.

Underperforming the region were Hong Kong’s Hang Seng, which edged 0.5 per cent higher to 24,138.31, while China’s Shanghai Composite fell 1.3 per cent to 3,011 on rate tightening concerns.