Jittery exporters dent stocks
Sunday 11 January 1998
Manufacturers of steel, chemicals and textiles are suffering from the depreciation of the Korean won and other Asian currencies against the dollar by as much 50 per cent over the past three months. Those declines have made the prices of Japanese products on international markets more expensive than those of regional competitors.
The benchmark Nikkei 225 stock average is expected to fall to near 14,000 next week as plummeting Asian currencies drive investors away from basic materials towards electronics exporters expected to benefit from the cheap yen.
"We have to contemplate a fall to as low as 14,200 or even 14,100 ... We'll continue to see a shift away from basic materials towards high-tech leaders like Sony and other trusted first-rate companies," said Yoshio Inamura, manager at Tokyo-Mitsubishi Asset Management.
Last week the Nikkei 225 dropped 263.64, or 1.73 per cent, to 15,258.74. "The impact of Asia as a whole is significant. If the situation remains unchanged, the market will fluctuate around 14,000. Even if it manages to climb back up to 15,000, it'll tumble right back down," said Koichi Kurata, manager at Asahi Mutual Life Insurance.
The economic disarray in Asia has investors fearing for the stability of Japanese financial institutions because they are among the region's principal creditors. Japanese banks hold the largest share of the $100bn in short-term foreign bank debt that Korean banks must repay over the next year.
"Banks have a credit risk lending to Asia, to sovereign or private borrowers, and we should not rule out the possibility of defaults in some cases," said Kiyoshi Tsugawa, chairman of Lehman Brothers Japan.
Japanese bonds are likely to recover as investors watch the continuing tussle within the ruling party and the government over proposed new measures to boost the economy. While the government is committed to cutting deficit and debt, a flow of bad news is making investors concerned it will have to borrow more money to pump into the ailing economy. There will be more talk by politicians of tax cuts and an increase spending on public works in anticipation of the elections for the parliament's upper house.
Copyright: IOS & Bloomberg
- 1 What happens to your body when you give up sugar?
- 2 Have sex with your iPad thanks to the new sex toy no-one asked for
- 3 The 'sex selfie stick' lets you FaceTime the inside of a vagina
- 4 Why you're almost certainly more like your father than your mother
- 5 Westboro Baptist Church couldn't picket Leonard Nimoy's funeral because they didn't know where it was
Mark Zuckerberg: Facebook CEO's one simple test for who to hire
Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
'A girl is more responsible for rape than a boy': The statement that shocked the world... except India
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Saudi Arabia executions now at 'unprecedented rate' after kingdom kills four more in two days
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...