Here is a clipping to help us understand the market dynamics ... the begining of the frenzy by Japanese institutions to not be left behind. Can the Japanese public be too far behind ... I think I hear the patter of running feet towards us and I think they want what we already hold.
Thursday, November 11, 1999
Nikkei's Rise Driven By Tech Shares, Supply-Demand Balance
TOKYO (Nikkei)--An improving balance of supply and demand is fueling gains in the benchmark Nikkei Stock Average as an inflow of new money from domestic institutional investors is added to a growing enthusiasm for Japanese shares among foreign investors.
However, the gap between market winners and losers is widening, market insiders note. Even as buying accelerates in the high-growth information and communications sectors, many companies that are lagging in restructuring or showing anemic earnings performance are seeing unchecked declines in their share prices. A total of 106 issues hit year-to-date lows Wednesday on the first section of the Tokyo Stock Exchange, a record high for 1999.
Foreign investors have been the principal engine driving the stock market's advance since March. But domestic investment funds have become a more prominent force recently, buying roughly 310 billion yen more shares than they sold in September and October on Japan's three biggest bourses. Nearly 10 new domestic equity funds are slated to be launched this month in a lineup that is adding to the inflow of money into the market.
Most investment trusts are raising their portfolio allocations to telecommunications and electrical machinery shares, counting on high profit-growth potential in the technology sector to boost investment returns.
Individual Japanese are also focusing their buying on information and communications issues, market insiders say. Both Sony Corp. (6758) and Softbank Corp. (9984), for example, rode this wave of buying to hit new post-listing highs on Wednesday. And many market participants are betting that the spread of Internet use in Japan will buoy information and communications stocks for some time.
A comparison of market capitalizations in July and now spotlights how leadership in the stock market is shifting to technology issues.
Softbank shot up to No. 8 in terms of market capitalization on Wednesday, when the benchmark Nikkei Stock Average set a new year-to-date high of 18,567.87. The firm was No. 17 on July 19, when the Nikkei touched its previous high of 18,532.58. NTT Data Corp. (9613) rose from No. 21 to No. 9.
But a number of other companies have seen striking erosions in their market-cap bases over the past four months.
Tokyo Electric Power Co. (9501) fell from No. 15 to No. 26 in the rankings, while East Japan Railway Co. (9020) skidded from No. 27 to No. 35. Mitsubishi Heavy Industries Ltd. (7011) dropped out of the top 50 altogether.
"(Stocks with little potential for big earnings gains in the immediate future) are being unloaded to make way for information and communications issues," said Tsuyoshi Segawa, head of equity trading at New Japan Securities Co.
(The Nihon Keizai Shimbun Thursday morning edition)
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