Ramsey, ok <g> - (Japan) Gov't vows to prevent financial crisis
TOKYO, March 11, Kyodo -
The government vowed to take decisive action Tuesday to prevent plunging stock prices from developing
into a financial crisis as corporations prepare to close their fiscal 2002 books on March 31.
Chief Cabinet Secretary Yasuo Fukuda said the government will work together with the Bank of Japan
(BOJ) to rev up the stock market.
''The government and the BOJ must jointly deal with (falling stock prices) in a decisive and flexible manner,''
Fukuda told reporters without elaborating.
Finance Minister Masajuro Shiokawa said the government will bring forward execution of the fiscal 2003
fiscal budget.
On Tuesday, the 225-issue Nikkei stock average slipped below the psychological threshold of 8,000 for the
second day in a row.
But Fukuda warned against excessive pessimism and said the latest stock price plunge will not lead to a
financial crisis as March 31 approaches, as is rumored in financial circles.
The Japanese financial system is not on the brink of crisis, he reiterated.
Fukuda said he believes quick parliamentary clearance of bills for the fiscal 2003 budget and a deregulation
package would help stabilize the financial market.
Economy, Trade and Industry Minister Takeo Hiranuma said the plunges in Tokyo stocks are ''very serious,''
but that the stock price moves ''do not reflect our country's economic fundamentals.''
The trade minister said Japan needs to closely watch the situation, adding that he hopes the central bank
will take the necessary steps to deal with the situation.
Shiokawa said the government plans to front-load the allocation of the budget in the first half of the fiscal
year that begins in April.
Health, Labor and Welfare Minister Chikara Sakaguchi told a separate news conference that the
government must draw up a new employment policy because escalating tension over Iraq is expected to
hurt Japan's economy.
Financial Services Minister Heizo Takenaka said the government ''will take necessary measures
aggressively and boldly'' to prevent the bottom from falling out of the economy on the financial side.
Takenaka also said the Financial Services Agency will continue to take various steps to ensure that trading
is conducted smoothly and fairly on the stock markets.
Meanwhile, top officials of the ruling Liberal Democratic Party (LDP) agreed Tuesday to urge the
government to temporarily suspend the mark-to-market accounting method on corporate securities holdings
in view of the stock market plunge.
LDP policy chief Taro Aso and Hideyuki Aizawa, head of the LDP's antideflation panel, were among the
officials who proposed the measure in an attempt to limit the damage of the stock market decline on
companies closing their books on March 31.
Participants at Tuesday's meeting of senior LDP officials shared the view that immediate action is needed
to help domestic businesses, which will have to report huge valuation losses on securities holdings if share
prices continue to decline, LDP officials said.
home.kyodo.co.jp
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Asian Stocks: Japan's Nikkei Drops to 20-Year Low;
Korea Slides
By Michael Tsang
Tokyo, March 11 (Bloomberg) -- Japanese stocks fell, with the Nikkei 225 Stock
Average closing below 8000 for the first time in two decades, after a slump in
U.S. shares and concern a war in Iraq will cool demand dragged exporters such
as Sony Corp.
The Nikkei slid 2.2 percent to 7862.43 at the 3 p.m. close in Tokyo. That's the
lowest since Jan. 25, 1983. Sumitomo Mitsui Financial Group Inc. posted a
record drop on concern the Nikkei's slide will force lenders to book wider losses
on stock holdings.
Chief Cabinet Secretary Yasuo Fukuda said the government will work with the
central bank to stop a further drop in share prices.
``The Iraq situation has been prompting investors globally to withdraw from
equities all together,'' said Yoshihisa Okamoto, who helps manage the equivalent
of $1.9 billion at Fuji Investment Management Co. ``For Japan, it's a lot worse.
The government has been too late taking measures to prevent a crisis situation.''
Elsewhere in Asia, South Korea's Kospi index dropped 2.2 percent to a 17-month
low. SK Corp. led declines among SK Group companies after it restated 2002
net income and prosecutors charged group executives with faking accounts.
Australia's S&P/ASX 200 Index slid to its lowest in more than three years, led by
News Corp. Taiwan's TWSE Index fell for a sixth day, led by Mega Financial
Holdings Co. and other lenders, on concern lower interest rates won't be enough
to boost profit as demand for loans slumps.
All other major indexes in the region dropped, apart from benchmarks in
Singapore and India. China's indexes were little changed.
Veto
Nikkei futures for March delivery fell 2.7 percent to 7840 in Osaka and lost 2.2
percent to 7880 in Singapore.
The Topix index lost 1.8 percent to 770.62, with computer- related companies the
biggest decliners on the index.
Sony, the maker of Vaio computers, shed 2.9 percent to 4,080 yen. The
company, which had dropped 7.8 percent in the past six days, gets about 67
percent of its sales from overseas. Nissan Motor Co., Japan's third-largest
automaker and an affiliate of French carmaker Renault SA, slipped 5.3 percent to
785 yen.
The Standard & Poor's 500 Index and Dow Jones Industrial Average had their
biggest losses in six weeks on concern a U.S.- led invasion against Iraq will
occur soon.
France will use its veto to stop the United Nations Security Council from giving
Iraq an ultimatum containing the threat of war, President Jacques Chirac said
yesterday. The U.S., which along with the U.K. has deployed more than 240,000
troops in the Gulf, has said it's prepared to fight Iraq even without UN backing.c
``The U.S. economy is in a bad state and war concerns will also be negative for
exporters,'' said Takahiro Nakayama, who helps manage $800 million at Morley
Fund Management. Nakayama recently increased his cash holdings.
`No Instability'
Sumitomo Mitsui slid 12 percent to 206,000 yen, the lowest since it formed a
holding company in December. The bank has lost a fifth of its value in two days.
Sumitomo Mitsui and six rival banks' investment losses rose more than fourfold
to 5.8 trillion yen as of March 7 from a year ago, Daiwa Institute of Research said
yesterday.
Chief Cabinet Secretary Fukuda said told reporters today that there was ``no
instability in Japan's financial system'' and the government won't announce steps
to halt stock declines today.
Inflated Income
The Kospi fell 11.71 to 532.53, its lowest since Oct. 23, 2001. Kospi 200 futures
dropped 2.3 percent to 67.70, while the underlying index shed 2.1 percent to
67.79.
SK Corp., South Korea's largest oil refiner, sank by its 15 percent daily limit to
9,300 won. The company said yesterday its 2002 net income was 296.8 billion
won ($240 million), half the unaudited figure it posted a month ago.
Prosecutors charged 10 SK Group executives, including Chairman Son Kil
Seung, with faking accounts and accused unit SK Global Co. of hiding bank debt
and bloating profit.
SK Global, the trading unit for the group, plunged by its 15 percent daily limit to
5,220 won. SK Telecom tumbled 12 percent to 143,000 won.
``Investors can't spend their money on companies which have a credibility
problem,'' said Park Hyung Ryul, who helps manage 1.2 trillion won at KTB
Asset Management Co. in Seoul. Park sold SK Corp. shares yesterday and
today.
The S&P/ASX 200 sank 0.7 percent to 2723.20, its lowest since Oct. 19, 1999.
News Corp., which makes three-quarters of its sales in the U.S., fell 1.8 percent
to A$9.39 on concern a war in the Middle East would dent consumer confidence
and growth in the U.S.
``Ad spending has been depressed in the current quarter,'' said Scott Marshall,
head of research at Shaw Stockbroking Ltd. ``General uncertainty stops both
people and business spending. That brings marketing and advertising
expenditure down.''
Lower Rates
The TWSE dropped 1.4 percent to 4260.45. MSCI Taiwan futures for March
delivery in Singapore shed 1.5 percent to 180.40, while the Taiwan Futures Index
lost 1.9 percent to 4250.
The central bank may lower rates to stimulate lending and ease debtors'
payment burdens, the Economic Daily News reported, citing a central bank
official it didn't identify. Loans by the island's major financial institutions fell for a
19th month on an annual basis in January, according to the latest central bank
data released on Feb. 25.
``Although lower interest rates cut banks' costs, the banks haven't been able to
push out loans so their profits actually suffer,'' said Parker Wu, who manages the
equivalent of $32 million at Shinkong Investment Trust Co. He said he sold all his
shares of financial services companies.
Mega Financial, Taiwan's third-largest financial services company by market
value, fell 4.2 percent to NT$15.80. First Financial Holding Co., owner of Taiwan's
fourth-largest bank by assets, declined 4.7 percent to NT$20.40.
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