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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (34958)	12/9/1999 7:12:00 PM
From: Don Green	Read Replies (1) \| Respond to of 99985

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)

To: pater tenebrarum who wrote (34958)	12/9/1999 7:19:00 PM
From: Don Green	Read Replies (1) \| Respond to of 99985

BOJ Watch: Bank Holds Firm On 1 Trln Yen In Excess Reserves Friday, December 10, 1999 TOKYO (Nikkei)--The Bank of Japan is adhering closely to its daily pattern of keeping excess reserves in the money market right at 1 trillion yen. In fact, the bank conducted bill sales to drain reserves Thursday, bringing down the level of surplus funds in the money market for the day from roughly 2 trillion yen to 1 trillion yen. "It is hard to find a logical reason for the 1 trillion yen figure," one BOJ insider concedes. The BOJ was virtually forced into a debate over a quantitative policy easing once it adopted a zero interest rate policy under which it lost the flexibility to lower short-term interest rates further. Given the external pressures to adopt a quantitative easing, the level of excess reserves in the system is playing a role as a quasi-quantitative target, some BOJ watchers say. Although the central bank has firmly denied any such intention, the 1 trillion yen level has taken on a life of its own, serving as the focal point of what amounts to a prearranged harmony between the BOJ and the money market. But the bank's aggressive injections of funds maturing after Dec. 31 will result in surpluses in the money market for the rest of the year. If the BOJ is to stick to a 1 trillion yen target, it will have to drain reserves daily. It may have signaled just such a commitment by announcing operations for Friday and next Wednesday to remove a total of 1.5 trillion yen from the money market. BOJ watchers say the central bank does not want to suddenly deviate from the 1 trillion yen level because such a move could roil not only the money market but also the currency markets. Even so, the BOJ may have a natural way out. It will be easy for it to justify an expansion of excess reserves toward year-end if a volatile surge of funds demand emerges. (The Nikkei Financial Daily Friday edition)