Bonds to stay on a high

TOKYO MARKET: Nikkei

JAPANESE bonds are likely to stay near record highs this week, and stocks to enjoy mixed fortunes, as investors remain sceptical over the government's progress in shoring up the rickety financial system.

The ruling Liberal Democratic Party wants to pass bills aimed at preventing the collapse of troubled banks by early September. Opposition parties are stalling the passage of these bills, creating concern that could lead to a rise in short-term interest rates. That would hurt bonds, because it raises funding costs for banks and other investors, analysts said.

"The big question is whether the LDP and the opposition can compromise on the bills aimed at stabilising the financial sector," said Michael Lockrow, a senior economist at Thomson Global Markets. "Until the bills are passed, it's hard for banks to make a move."

Last week, the yield on the benchmark government stock rose by half a basis point to 1.18 percent.

Government bills currently before parliament would close insolvent banks and speed up the disposal of 77trn in bad and risky loans held by banks. They would also enable the government to take over management of insolvent banks and create bridge banks to provide funding for sound borrowers.

On Tuesday, investors expect the Ministry of Finance to auction about 1.1trn ($7.7bn) of 10-year government bonds with a record-low coupon of 1.5 per cent. Any rise in bonds may be limited before an auction of 10-year government bonds on Tuesday.

Companies are likely to rush to sell bonds to raise funds before their half-year book-closing at the end of September, underwriters said. With yields so low, demand for high-quality corporate bonds will probably be firm, said Michiya Seki, a trader at New Japan Securities.

On the stock market, progress toward a merger between troubled lender Long-Term Credit Bank of Japan and Sumitomo Trust and Banking could spur buying of bank shares. Finance Minister Kiichi Miyazawa praised a plan to reorganise LTCB in preparation for its merger with Sumitomo Trust.

The benchmark Nikkei 225 Stock Average gained 1.15 per cent last week, to 15,298.93. It will probably trade between 15,000 and 16,000 in the coming week, said Ichizo Yamauchi, research director at Kokusai Asset Management.

UP

Prudential Corp Plc

17 Aug - 21 Aug '98

Shares in the Prudential, Britain's largest life insurer, rose 11 per cent. The company is said to have threatened to fire one-third of its 4,000 sales staff if they do not meet new targets after a sales force review. Staff have to generate a minimum of pounds 56,000 of business each year. Senior managers said that the sales department, accused of malpractice and of breaching the Financial Services Act, has just two or three years to prove its worth. Brokers are also recommending the stock after an $18bn offer by US insurer AIG Group for Sun America on Thursday. This valuation shows the Pru's US annuity subsidiary, Jackson National, could be worth as much as 400 pence a share.

DOWN

Reed Intl Plc

17 Aug - 21 Aug '98

REED INTERNATIONAL shares suffered one of the biggest declines in the stock market last week, falling nearly 12 per cent.

The company, one of the world's largest publishers, was hurt after a leading broker published a report in which it advised selling the shares. It estimates the company has above-average exposure to the advertising industry and compound earnings growth over the years 1997 to 2000 will only be 5 per cent.

There are increasing pricing and competitive pressures within the franchise business. This leaves the stock looking expensive and the price could drop to 440 pence.

Life and Style
Small winemakers say the restriction makes it hard to sell overseas
food + drink
Arts and Entertainment
A comedy show alumni who has gone on to be a big star, Jon Stewart
tvRival television sketch shows vie for influential alumni
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
News
Clare Balding
peopleClare Balding on how women's football is shaking up sport
PROMOTED VIDEO
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
News
i100
Sport
Jonny May scores for England
rugby unionEngland 28 Samoa 9: Wing scores twice to help England record their first win in six
Life and Style
fashionThe Christmas jumper is in fashion, but should you wear your religion on your sleeve?
News
ebooksNow available in paperback
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
Sport
Tony Bellew (left) and Nathan Cleverly clash at the Echo Arena in Liverpool
boxingLate surge sees Liverpudlian move into world title contention
Voices
Neil Findlay
voicesThe vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Life and Style
food + drinkMeat-free recipes and food scandals help one growing sector
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin