Wall Street Fallout Threatens Asian Tech Stocks; Nasdaq Futures a Bright Spot Today
CAROL LIN, CNN ANCHOR: Regardless of what happens today on Wall Street, the fallout from Friday's result has threatened to tarnish tech stocks in Asia. Lisa Barron of CNN Financial News is covering the story in Hong Kong.</s>LISA BARRON, CNN CORRESPONDENT (voice-over): Monday morning in Hong Kong-based Typhoon Eight Research and the brains behind the stock market information Web site are trying to calm clients.</s>DOUGLAS HANSEN-LUKE, MANAGING DIRECTOR, TYPHOON EIGHT RESEARCH: This is, so far, almost entirely a reaction to what's happened in America. The reason it's hitting us so hard is because so many industries and so many markets in Asia have actually been trying to copy and make themselves links to Nasdaq rather than older-economy stocks like the Dow.</s>BARRON: Chief among them, Tokyo, South Korea and Hong Kong, which all sell fast and furiously, especially the tech-share indices the Kosdaq in Korea, the Growth Enterprise Market, or GEM, in Hong Kong.</s>TONY SHALE, FINANCIAL INTELLIGENCE AGENCY: It's a retail investor-led reaction at the moment, and mom and pop, Mr. and Mrs. Wesnabe (ph) in Japan, Mr. and Mrs. Kin (ph) in Korea, Mr. and Mrs. Choy (ph) in Hong Kong, are the ones that are selling. They've been the people who've been bidding these markets up fastest and strongest, and they're the ones who are panicking.</s>BARRON: Even in markets less dominated by tech stocks, from Shanghai to Sydney, shares reacted to the double-whammy from the</s>U.S.: the tech selloff and economic data showing a rise in inflation which sparked fears of higher interest rates.</s>DENNIS MAHONEY, BNP EQUITIES AUSTRALIA: To start with , the market is full and a bear as expected. The U.S. market was down 5 or 6 percent. We're down 5 or 6 percent.</s>BARRON: Only Taiwan shares stood up Monday, closing more than 1 percent higher. But Taipei had already followed the U.S. in its Saturday trading session, falling 5.4 percent. The million-dollar question in Asia is: What happens next? Analysts say the answer lies on Wall Street. In the meantime...</s>HANSEN-LUKE: We're actually advising people to avoid all technology-related stock probably for the next three months. It's not going to be a discriminant cull.</s>BARRON: Analysts say it's a minute-by-minute, second-by-second situation, and it's too early to say whether this is a correction in Asian markets or a crash -- Carol.</s>LIN: Lisa, would you say that all the losses were a direct result of Friday's U.S. market closes?</s>BARRON: Pretty much, it's been purely the U.S., Carol. Both factors, the tech selloff, of course, and the data about inflation and sparking fears of interest rates is what spooked investors in Asia, primarily.</s>LIN: Well, Asia appears to be in a recovery. So what could this mean -- this dip mean for tech stocks in Asia for the long term?</s>BARRON: Well, a lot of the companies that have actually been listing on Hong Kong's Growth Enterprise Market, or similarly heavy tech indices around the region, have been little more that a concept. A lot of companies with no revenues, no staff, no Web site even, have been launching on these markets and having millions of investors buying into them. So what analysts are saying is that what's going to happen now is that a lot of those second- and third-tier tech stocks without a lot of substance or even revenues will not be listing and not getting the money, and investors will be looking for the tech companies that do have that substance in revenues -- Carol.</s>LIN: All right, perhaps a return to fundamentals. Thank you very much, Lisa Barron, in Hong Kong. So what can investors expect today? Susan Lisovicz is at the New York Stock Exchange. Susan, what are the futures telling us now?</s>SUSAN LISOVICZ, CNN CORRESPONDENT: Well, actually that is one of the few bright spots we can concentrate on this morning, Carol. We have seen them turn around, especially for the Nasdaq futures which were, in the middle of the night, down 110 points. They are now, if I'm looking right there, up 37. So that is a dramatic turnaround. The S&P; futures were also pointing south, and they are up now as well. And that is an indication of what the markets will do on the open. The other thing, of course, is that buyers -- investors have learned to buy on the dip. And the key question today is whether that psychology has been broken. That's been a mainstay of maintaining this bull market -- the bull market which, of course, is very much in doubt -- Carol.</s>LIN: All right, Susan, well, some important earnings are coming out today. How is that likely to impact the market?</s>LISOVICZ: That is the other bright spot, Carol. We've had some fantastic earnings. We did expect to see them for the quarter just ended. Two Dow-listed stocks not only beat the Street estimates, Citigroup just blew through the estimates, reporting its first-quarter revenue of $17 1/2 billion, beating the Street by 26 cents, a very wide margin. A number of other high-profile companies, including Ford, Eastman Kodak, Sears, Bank America, Bank of New York, all expected to report today. And earnings are going to be one of the headlines over the next week or so. Economic reports -- not as many coming out this week, and that may be something that investors can grasp on as a sign of confidence in the market.</s>LIN: All right, we need to see some confidence today. Thanks so much, Susan Lisovicz. Search CNN.com CNNSI.com CNNmoney.com The Web