Stock Outlook: World Growth To Boost Nikkei Above 20,000
Friday, December 10, 1999
TOKYO (Nikkei)--The year 2000 should see simultaneously the expansion of all the world's major economies, boosting the Nikkei average above 20,000, says Suguru Otsubo of Fuji Investment Management Co.
The Japanese economy should show growth of 1-2% if current stimulative policies continue, Otsubo says. Korea and Southeast Asia are recovering from the financial crisis of the past two years. The U.S. will be in the midst of a presidential election year, which should also bring expansionary fiscal policies.
The Y2K computer bug and year-end holidays will keep stock-buying activity quiet through the end of the year, he says.
Stocks in the information services sector, which have been the major engines of the market, are beginning to look toppy and unstable. The recent release of data showing Japan's economic growth was on the decline in the July-September quarter makes it hard to buy stocks keyed to domestic demand. The strong yen makes technology and other exporters unattractive, he says.
However, fresh buying from investment trusts should place support under the market, and a sharp decline is hard to imagine. Through year-end, the Nikkei will probably be confined to the 18,000-19,000 range, he says.
In the January-March quarter, sales from the dissolution of interlocking shareholdings and profit taking will keep a lid on the market's gains. But the dollar is unlikely to fall below 95 yen, and the market should slowly begin to return to more relaxed trading.
As fears of a stronger yen fade, the stock market should resume its gradual uptrend, Otsubo says.
Information services, environmental services and health care are the sectors that show the greatest profit potential over the long term. There are also attractive opportunities in sectors where market shares are changing, such as machinery and electronic components, he says.
(The Nikkei Financial Daily Thursday edition)
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