HONG KONG, April 13 (Reuters) - Asian asset prices were mixed on Thursday after the U.S. Nasdaq recorded its second worst points fall in the space of a few days, shaking confidence in telecom, media and technology (TMT) shares, but bonds firmed.
Stocks ended weaker in Hong Kong, Taiwan, Malaysia and the Philippines, while a switch out of TMT and into old fashioned financials in Singapore saw the Straits Times Index gain.Markets in South Korea and Thailand were closed for the day.
Benchmark bond spreads eased back in by around five to 10 basis points after a volatile overnight session in the U.S. left Asian credits with a positive tone and investors took the opportunity to buy good quality paper cheaply.
TMT fallout sent Hong Kong's Hang Seng to its lowest level in eight weeks before regaining some ground by the close, but the territory's "new economy" story appeared to pass the test of faith in two key areas.
Hong Kong's biggest firm, China Telecom reported earnings at the top end of analysts' expectations, giving the mobile phone firm the strength to swallow a massive write-off on out-dated analogue equipment in one go.
ChinaTel reported 1999 net earnings of 4.8 billion yuan ($580,000) after writing off 8.4 billion yuan on old equipment. The firm had made 6.9 billion yuan in 1998.
It also revealed a subscriber base that swelled to 15.6 million from 6.5 million a year ago and revealed it was still expanding.
"The subscriber growth in the first quarter was phenomenal," Goldman Sachs telecom analyst Tim Storey, told Reuters.
"Their profit was better than my expectation before the writeoff," he added.
ChinaTel stock ended up 0.8 percent at HK$63.00.
The second test was taken by Pacific Century Cyberworks (PCCW) which unveiled a $3 billion joint venture with Australia's Telstra on Wednesday.
PCCW traded for the first time since the announcement on Thursday and the stock ended the day up 7.1 percent at HK$16.50.
Telstra ended down A$0.23 at A$7.41.
One day after hitting a 28-month low, China's yuan pushed back to end higher on Thursday, the market returning to normal trade within its tight, government-imposed band.
The yuan closed at 8.2791 to the U.S. dollar, sharply up from 8.2830 on Wednesday, sandwiched in a five-notch range of 8.2791 to 8.2796.
Wednesday's slide was seen by dealers as a test of market reaction to a proposed widening of the trading band by Beijing.
Much to the market's surprise, the central People's Bank of China did not intervene to support the yuan on Wednesday, allowing it to close below the key 8.2800 level.
"Given that we are seeing a very strong trade surplus continuing there are a lot of people saying that if the (yuan) were to float or at least trade in a (wider) band it would probably result in a stronger (currency)," Craig Chan, strategist at ING Barings in Hong Kong, told Reuters Television.
"But the PBOC view is that they'd like to take on a weaker exchange rate if they ever did decide to move to offset deflationary effects and boost the trade balance as well," Chan said. Chan said a stronger yuan would not necessarily harm economies in the greater China region as they build a recovery from 1997's economic crisis.
"If the market continues to price in this recovery story, if the PBOC officials decide to move on the exchange rate, the impact shouldn't be very negative, besides we are seeing regional currencies strengthen quite significantly," he said.
A recovery in Philippine sovereign debt prices set the stage for the government to issue up to $700 million in euro-denominated bonds to complete its $1.5 billion bond financing programme.
Finance under-secretary Joel Banares, in London on Wednesday wrapping up a three-day roadshow, said the seven- and 10-year euro bond would be the country's only international bond offering in euros this year.
Banares said the Philippines was also looking at raising a maximum $300 million in the Samurai bond market if it decides to tap Japanese money.