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Asia Markets-Tech stocks lead, HKD forwards pressed

HONG KONG: Asian asset prices were pushed to record highs on Tuesday, with high-tech equity issues leading the charge once again.

Electronics indices in South Korea and Taiwan hit lifetime highs, supporting rises in their respective broader markets.

Funds flowed into Hong Kong, pushing the Hang Seng to an all-time high it's second in successive days and contributed to an inversion in long-dated exchange rates.

The technology revolution marches on in Asia and shows few signs of slowing down, with electronics shares in Taiwan and South Korea bounding to record highs.

"With the electronics cycle very much into its upswing and showing all the signs of carrying on into next year...anything that's going to benefit from that is a buying opportunity," Robert Rountree, managing director of Asian research at Prudential Bache Securities in Hong Kong told Reuters Television.

Solid gains in semiconductor stocks helped Seoul's electronics sub-index hit a lifetime high of 4,968.19, before easing to end the day at 4,854.79, up 2.7 percent.

Taiwan's electronics sub-index also hit record levels, touching 545.02, before easing to 539.50 a touch above its previous lifetime best and three points up on the day.

Technology analysts Dataquest said revenues for the worldwide semiconductor industry grew 22 percent in 1999, breaking the record level set in 1995, to reach about $169 billion.

The World Semiconductor Trade Statistics forecast that this year's global DRAM market will grow by 24.6 percent, up from the 31.5 percent jump of 1999.

The impending PetroChina stock offering in Hong Kong could also freeze a lot of HKD interbank liquidity, adding further upward pressure to spot rates versus one year money, market sources said.

Asia needs deeper domestic bond markets if the region's economies were to guard against a fresh attack of short-term fund flows and reduce the risk of a second financial crisis erupting, said Thailand's central bank governor Chatu Mongol Sonakul.

Chatu Mongol told an Asian Development Bank (ADB) conference in Manila that short-term capital flows, largely blamed for triggering the crisis in 1997, remained unabated and could still disrupt the economic recovery Asia has seen so far.

Asian borrowers tapped short-term, bank-intermediated funds or volatile foreign funds to finance long-term projects, which caused a serious financial crisis when the funds flowed out.

Chatu Mongol said domestic bond markets would supply alternative funding with lesser risk of a liquidity crunch.-Reuters