Outlook: brighter than dark
From the Nikkei website:
Wednesday, August 2, 2000
Stock Market Outlook: Summer
Turning Point
TOKYO (Nikkei)--The Tokyo stock market will reach a
turning point in the summer months, gradually raising its
support levels, says Toshio Tahara, chief portfolio
manager at Sumisei Global Investment Trust
Management Co.
Companies and financial institutions have been busily
selling interlocking shareholdings, but this should come
to an end as companies announce their mid-term
earnings for the half to September. Individuals have been
selling high-tech and information technology shares to
cut their losses on margin positions, but this too should
end this month, as six months have passed since the
peak of margin buying. That should help restore calm to
the market, Tahara says.
Right now, there is an absence of buyers, scared off by
the prospect of a broader credit crunch stemming from
Sogo Co.'s (8243) filing for bankruptcy protection. But
Japan's financial safety net should ensure that any
downside risk to stock prices is limited, he says.
Sogo's troubles should cause the Bank of Japan to put
off its plans to abandon its zero interest rate policy until
September. A quarter-point rise in Japanese interest
rates is already priced in to the stock market, so it should
not be the cause of much concern, he says.
An economic stimulus from the government's
supplementary budget, expected to be about 3 trillion
yen and unveiled in the fall, will mark the real turning point
for the stock market. If the government does the sensible
thing and focuses the additional budget on the kinds of
information technology infrastructure that is earmarked
for strong growth, and not old-style public works projects,
then the budget will really have the power to lead the
stock market higher, he says.
The Nikkei Stock Average could recover to 19,000 by
year-end, Tahara predicts. Investors should be focusing
on stocks that are now receiving strong levels of
incoming orders, indicating strong growth prospects,
such as Oracle Corp. Japan (4716) and Furukawa
Electric Co. (5801), he says.
(The Nikkei Financial Daily Wednesday edition) |
