Tokyo Market: Government can't save stocks
Sunday 09 August 1998
"All eyes are on the `total plan'. Not only is there a strong possibility the opposition will hold it up, but the real worry is that banks won't be able to crawl out from under their bad-loan burden," said Masatoshi Kikuchi, senior strategist at Daiwa Institute of Research.
If the bills are blocked, investors could abandon shaky stocks in favour of bonds, which are expected to rise. "That could prompt a flight-to-quality shift," said Kikuo Shirose, at Tokyo-Mitsubishi Asset Management.
Last week, the yield on the benchmark government bond fell 5.5 basis points to 1.195 per cent. The benchmark Nikkei index fell 3.4 per cent to 15,829.17. It will trade between 15,300 and 16,200 this week, Mr Kikuchi said.
Long-Term Credit Bank of Japan sank to its lowest price ever on Friday on the speculation that its proposed merger with Sumitomo Trust may be in jeopardy. Traders who regard the merger as a prototype of proposed government action for restructuring weak financial institutions would probably trounce banking shares if the alliance is aborted.
Banks may also be dragged down by concern over the potential for another round of currency devaluations across Asia. Vietnam devalued its currency, the dong, on Friday by 7 per cent. The dollar strengthened more than Y1 against the Japanese currency on the news.
Volatility in US markets may provide the third leg of a bearish triangle. "If New York shows signs of floundering again, then it would be hard for Tokyo to hold up," said Celia Farnon, at Nomura Securities. It may undermine support for Japan's top exporters, which have relied on the health of overseas markets to assure profitability in the face of sagging domestic sales and price cutting.
Signs that foreigners are souring on Japanese equities could also pull down shares. Trading is likely to be thin as Japan heads into its Obon holiday. Still, some bright spots remain. Bargain-hungry shoppers may pick up shares of Sony, which fell 4.7 per cent last week on expectation that it will benefit from the weakening yen.
Exclusive: World’s most pristine waters are polluted by US Navy human waste
Missing Malaysia Airlines Flight MH370: Any terrorist seizure of the plane ‘would have required one hell of a piece of planning’
Croatia's second city to close 'worst zoo in the world' after reports of 'nightmare' conditions and 'depressed' animals
Missing Malaysia Airlines Flight MH370: Hijackers, pirates or suicide – the theories surrounding the mystery
Missing Malaysia Airlines Flight MH370 Q&A by Simon Calder: How far could it have travelled? Who was responsible and what would their plans be? And how can a plane just vanish?
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
The rise of Ukip: Study warns Labour that Eurosceptic party's electoral base now 'more working class than any of the main parties'
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
Fracking is turning the US into a bigger oil producer than Saudi Arabia
- 1 Is your name now 'banned' in Saudi Arabia?
- 2 Exclusive: World’s most pristine waters are polluted by US Navy human waste
- 3 Pakistani gang rape victim Amina Bibi dies after setting herself on fire
- 4 Missing Malaysia Airlines Flight MH370: Jet ‘hijacking’ began soon after take-off
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...