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HK hit by Taiwan-China friction
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July 16, 1999: 5:09 a.m. ET
Selling frenzy sends Hang Seng 1.6 percent lower; Taiwan plunges record 506 points
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LONDON (CNNfn) - Hong Kong shares skidded Friday as China threatened to use military force to quash any independence drive by Taiwan, while Taiwan shares spiraled to their steepest one-day point loss in nine years.
Tokyo shares reversed early gains to close down 1 percent amid a steep slide in a high-tech bellwether that rippled across the sector.
Taiwan plummeted 6.4 percent or 506.46 points to 7,411.58 as the country's leader vowed to stand firm in his demand for separate status from China. Irate officials in Beijing responded to Presdient Lee Teng-hui's abandonment of the "One China" policy by warning China could invade Taiwan if the nation continues on its present collision course.
The Nikkei 225 average had risen early on the back of strong earnings reports from second-tier brokerage houses, but executed an abrupt about face after Warburg Dillon Reed put a "sell" recommendation on the high-flying Internet investor, Softbank Corp.
Tokyo's benchmark index closed down 1 percent, or 183.56 points, at 18,248.30. Softbank stock tumbled 7.18 percent to 32,300 yen. The shares had surged more than 8 percent earlier Friday to an all-time high, on top of a nearly 10 percent surge Thursday.
Local traders told Reuters the Nikkei could be in for a short-term correction, given the blistering pace of its rally in the past week and the fact that its 52-week moving average is 20 percent lower than the present blue-chip average.
Among high-tech decliners, Fujitsu lost 2.52 percent, to 3,100 yen, while Advantest slid 4.22 percent, to 14,750 yen.
A day after the Hang Seng rebounded more than 1 percent amid talk that the market had begun to discount Taiwan-China tensions, the territory's leading gauge ended down 1.55 percent or 213.65 points at 13,545.24, following China's admonishment.
At one point, the Hang Seng had been down more than 2 percent amid talk that a slowing Chinese economy could strengthen the hand of those in favor of a devaluation of the national currency, the yuan.
Benign consumer inflation data in the U.S. eased concerns the Federal Reserve board may imminently hike interest rates and helped drive the S&P 500, the Nasdaq and the Dow Jones industrial average to higher closes.
In Tokyo, the brokerage sector outperformed the overall index. Wako Securities rose 8.36 percent to 415 yen, while Marusan Securities advanced 4.24 percent to 860 yen. Accompanying them in the outperformers' column were Japan's Big Three securities houses Daiwa, Nomura and Nikko.
By contrast, the selloff in Hong Kong sent every component on the Hang Seng into negative territory. HSBC Holdings slipped 1 percent to HK$95,500, Hang Seng Bank lost 2.6 percent to HK$83.000 and Bank of East Asia gave up nearly 4 percent to $HK18.250.
Widespread dumping of small cap stocks amid margin calls dented Singapore trade, pushing the Straits Times Index down 1.09 percent to 2,134.22, well off earlier lows.
Australia's All Ordinaries dipped 0.35 percent to close at 3,055.4 amid weakness in industrial stocks that was slightly offset by strength in the resources sector. Index powerhouses News Corp. slipped A0.18 dollars to A$12.30.
In Seoul, a favorable earnings outlook trumped worries about higher interest rates, sending the Kospi soaring almost 4 percent to close at 1,020.82. The closest rival in the gainer's column - the Philippine Composite index - ended up just 0.3 percent at 2,585.69 after trading in a narrow range.
Shares in Kuala Lumpur extended their losses to close down 0.21 percent, with investors unloading positions ahead of the weekend. Jakarta shares finished up 0.28 percent, wiping out previous losses, after the completion of the vote count from the June 7 parliamentary elections. The final tally had the country's opposition leader, Megawati Sukarnoputri, leading.
Thailand's SET index eased nearly 2 percent in late trade.
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