Tokyo stocks seen remaining firm next week
KYODO NEWS - October 01, 1999 19:13
TOKYO, Oct. 2 (Kyodo) -- By: Keiji Hirano Share prices on the Tokyo Stock Exchange are likely to stay firm next week, buttressed by continued expectations of a sustained recovery in the Japanese economy.
A sharp rise in the value of the yen could, however, cloud the picture.
The benchmark 225-issue Nikkei index closed at 17,712.56 on Friday, up sharply from 16,871.73 a week earlier. Traders said they expect the Nikkei to move between 17,300 and 18,200 next week.
The key market gauge has remained below 18,000 since Aug. 25, when it hit 18,164.99 before closing at 17,855.16.
Market players expect the Bank of Japan's (BOJ) quarterly Tankan business confidence survey, to be released Monday, to underscore the nation's economic recovery.
Muneyuki Ichihara, investment information manager at Nomura Securities Co., said, ''The Tokyo stock market will react positively if the Tankan figures show an improvement from the previous survey, as is now widely expected.''
Concerns remain that an improvement in the Tankan data could boost the yen against the U.S. dollar again, following the yen's stabilization at a relatively weak level this week, traders said.
The strong yen is likely to dampen the economic recovery in Japan, weighing on share prices, particularly those of exporters.
Traders said, however, it is unlikely that the Japanese currency will advance sharply after top monetary officials from the Group of Seven (G-7) major economies expressed concern about its strength following their meeting in Washington on Sept. 25.
Following the G-7 meeting, BOJ Governor Masaru Hayami said Tuesday in Washington the central bank is prepared to be flexible in providing ample liquidity under its zero interest rate policy that could help prevent the yen from rising sharply, traders said.
Investors are waiting to see what the BOJ Policy Board decides at its meeting on Oct. 13 and how the foreign exchange market moves afterward.
Corporate realignments in various sectors will be another factor buoying Tokyo stock prices next week, traders said.
This week, investors had a report on an Internet tie-up between NEC and Intel Online Services Inc., a new venture of Intel Corp., while Sakura Bank announced Thursday it has agreed with Deutsche Bank to join hands in securities and investment advisory management.
Expectations of additional government stimulus measures under Prime Minister Keizo Obuchi's new coalition cabinet will help share prices in Tokyo move up, traders said.
A new comprehensive economic package is expected to include additional public-works spending as well as fiscal and tax measures to support small enterprises and venture businesses.
Meanwhile, the recent instability in New York share prices will remain a concern for investors in Tokyo, traders said.
The Dow Jones Industrial Average in New York was volatile this week ahead of a meeting of the U.S. Federal Open Market Committee (FOMC) next Tuesday.
Investors expect the FOMC to leave its current monetary policy unchanged, but Kazunori Jinnai, deputy general manager of the equity department at Daiwa Securities SB Capital Markets Co., said another interest rate hike this year is possible as the U.S. economy is still in good shape.
Traders said the current adjustment phase on Wall Street will continue for a while, and that the Dow will remain top-heavy next week.
Meanwhile, referring to a major nuclear accident Thursday at a uranium-processing facility in Ibaraki Prefecture, Hiroichi Nishi, deputy general manager of the products group at Nikko Securities Co., said the impact of the accident on the stock market will be limited.
''Although it remains uncertain how the nuclear accident will affect economic activity and people's daily life, I believe it will not dampen the recovery trend in the economy,'' he said.
Average daily trading volume on the Tokyo Stock Exchange this week decreased to 434.80 million shares on the main section, down 146.96 million shares from a week earlier.
Sakura Bank topped all issues in volume terms and closed the week at 785 yen, up 55 yen, on turnover of 74.95 million shares.
Second was Itochu, which rose 36 yen to 363 yen on 40.45 million shares traded. Nippon Steel came in third, ending the week at 287 yen, up 29 yen, on volume of 39.67 million shares.
Pacific Metals, a ferronickels manufacturer, was fourth, rising 22 yen to 232 yen on volume of 32.27 million shares, while Toshiba ranked fifth, closing the week at 778 yen, up 38 yen, on 31.35 million shares traded.
The next five leading shares in terms of volume were Mitsubishi Heavy Industries, NKK, Sumitomo Metal Industries, Fujitsu and Nikko Securities.
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