OT: 6 Month Outlook on Japan Share Market
Tuesday, July 25, 2000
Stock Market Outlook: Weakness
Until September
TOKYO (Nikkei)--The Nikkei Stock Average is likely to
fall below 15,000 by mid-September because the failure
of Sogo Co. (8243) underscores how bad Japan's
structural problems are, making it difficult to invest in
general contractors, retailors and banks, says Tatsunori
Kawai, research department head at Ace Securities Co.
But the market will take on a different character again
after September, entering an 18-month rally, Kawai
predicts. The Bank of Japan is likely to abandon its zero
interest rate policy that month, he says. He sees the BOJ
waiting until after the U.S. Federal Open Market
Committee meets in August, and until the Tokyo stock
market hits bottom and begins to rebound, before
starting to raise interest rates.
In September and October, the U.S. stock market will be
marking time at high levels ahead of the presidential
election, which will encourage funds to flow to the Tokyo
stock market, improving demand, Kawai says. Still, the
17,661 intraday high seen July 4 might mark the upper
limit for the Nikkei average for the rest of this year, he
adds.
Kawai sees information technology shares resuming
their leadership role as the market heads higher starting
in the fall, based on the strength of three main
subsectors: digital home appliances, mobile telephones
and fiber optics.
Mobile phone services like NTT DoCoMo Inc.'s (9437)
i-mode will face some limitations, so communications
companies and content providers will also experience
some tough going, he says. On the other hand, firms that
produce components for mobile phones and digital
appliances should do well. Rohm Co. (6963), Kyocera
Corp. (6971) and Murata Mfg. Co. (6981) should be
strong, he predicts.
Higher-value-added manufacturers of fiber-optic network
infrastructure and related components will grow strongly,
while information technology will boost research on the
human genome, helping firms like Taisho
Pharmaceutical Co. (4535), Kawai says.
(The Nikkei Financial Daily Tuesday edition) |
