ASIAN MARKETS:
Hong Kong: -735.18 [was down over 800 earlier this evening]
Taiwan: -617.65
Japan: -560.47
finance.yahoo.com
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By CBS MarketWatch - Last Update: 12:17 AM ET Mar 13, 2000
JAPAN SLIPS BACK INTO A RECESSION
TOKYO (CBS.MW) -- Japan said Monday its economy shrank for the second quarter in a row, with output decreasing 1.4 percent during the last three months of 1999 in a contraction that marks what economists generally define as a recession. Most government and private economists had expected the fourth-quarter gross domestic product to fall only 1.0 percent. Despite the worse-than-expected headline number, several analysts and government officials said they believe the world's No. 2 economy has turned the corner toward recovery. The culprit behind the economy's October-December contraction, as before, was weak private demand. Consumer spending fell 1.6 percent from the July-September period, and housing investment dropped 5.8 percent.
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TAIWAN STOCKS PLUNGE AHEAD OF ELECTIONS
TOKYO (CBS.MW) -- Asian markets fell across the board, with Taiwan stocks tumbling in their biggest decline in 8 months amid tensions running up to the nation's presidential elections. Tokyo's Nikkei Average surrendered 1.5 percent as Japan's economic picture clouded. At the forefront of the Taiwan sell-off, the market has been beset by political concerns, with China relations looming over the countdown to next weekend's presidential elections. Some investors are hedging in case the ruling Nationalist party is defeated.
cbs.marketwatch.com
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TOKYO STOCKS PULLED LOWER BY HIGH-TECH POWERHOUSES
TOKYO, March 13 (Reuters) - Tokyo stocks fell by midday on Monday as high-tech heavyweights such as Sony Corp , Softbank Corp and Hikari Tsushin Inc extended their recent downtrend and dampened overall sentiment. Traders said institutional investors were unloading such shares, which scored solid gains earlier in the year, to lock in a solid performance for their portfolios ahead of end-March book closings. The selling spooked individual investors out of the shares as well.
``No one knows when these high-tech issues are going to hit the floor and rebound,' said Hitoshi Ichio, strategist at Commerz Securities in Tokyo. ``Investors are thinking it's wiser to shift their money into cyclicals and wait for the market to come to a consensus on valuations for these Internet and high-tech issues.'
The benchmark Nikkei average fell 298.91 points or 1.51 percent to end the morning session at 19,451.49. The June futures contract <0#JNI:> fell 370 points to 19,470. The capital-weighted TOPIX index (^TOPX - news) of all first-section shares fell 56.11 points or 3.44 percent to 1,577.19.
Sony, considered a bell-wether of Japan's high-tech sector, fell by its daily limit of 2,000 yen or 7.6 percent to 24,300, hit by renewed selling pressure after its home video-game unit said on Friday some of its new PlayStation2 game consoles had malfunctioned. Internet investor Softbank was ask-only at 94,200 yen, down by its daily limit of 5,000.
Hikari Tsushin, another Internet investor and a leading mobile phone subscription agency, was also down by its daily limit of 5,000 yen and ask-only at 88,500. Traders said Hikari Tsushin was under selling pressure after a magazine article last week painted a negative picture of its business practices. A spokeswoman said on Friday there were errors in the article and the company intended to file a complaint. Losses in Hikari Tsushin discouraged buyers from Crayfish Co Ltd , an e-mail service provider in which it holds a 50.1 percent stake. Crayfish was ask-only at 33.4 million yen at midday, still untraded since its launch on Friday on the Tokyo Stock Exchange's (TSE) Mothers market for venture firms.
Traders said losses in such shares had sparked a fear of heights in the overall market, turning investors away from key large-cap stocks such as telecoms giant Nippon Telegraph and Telephone (NTT) Corp and its mobile phone unit NTT Docomo . NTT fell 60,000 yen or 4.2 percent to 1.37 million yen, while NTT Docomo fell by its daily limit of 380,000 yen or 9.79 percent to 3.5 million yen.
Investors instead shifted their money into cheaper cyclical shares in industries such as textiles and construction in morning trade. Traders said the market's bullish long-term outlook for the economy was unfazed by slightly worse-than-expected gross domestic product (GDP) data announced shortly before the market opened.
GDP for October-December showed a decline of 1.4 percent from the previous quarter. Economists surveyed by Reuters last week had predicted a contraction of 1.0 percent.
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JAPAN: MATURING OF POSTAL SAVINGS ACCOUNTS TO DEEPLY IMPACT ECONOMY - Monday, March 13, 2000
TOKYO (Nikkei) -- A massive amount of money is expected to leave the postal savings system over a two-year period starting April 2, when time deposit accounts made when interest rates were high begin to mature. Where this money ends up is sure to have a large impact on the economy.
An estimated 106 trillion yen worth of postal time deposit products will mature over the two-year period, according to the Ministry of Posts and Telecommunications. After taxation and redeposits into the postal savings system, analysts expect around 49 trillion yen to flow out. A total of 40.5 trillion yen, after taxes, will either be spent on goods and services, or be invested in financial products other than the postal system.
The maturing accounts will have earned an aggregate 18 trillion yen in interest income for holders of instruments maturing in fiscal 2000 and 16 trillion yen for products maturing the next fiscal year. A Nihon Keizai Shimbun Inc. study projects this additional income will boost Japan's gross domestic product by an inflation-adjusted 1.6% next fiscal year and a real 0.9% in fiscal 2001.
A Nikkei survey of Tokyo-area households projects that 3.9% in principal from maturing deposits and 2.2% in interest will be rotated into stock investment trusts, for an estimated total of 3.3 trillion yen over the next two fiscal years.
A recent study by Sanwa Research Institute also forecasts that 2-4 trillion yen will move into stocks in the same period on the basis of trends in household assets. Private-sector banks are expected to line up a maximum of 13 rillion yen in savings accounts. And another 1-2 trillion yen will likely move into foreign-currency denominated accounts.
On the downside, bond market participants anticipate that long-term interest rates will rise as the Ministry of Finance's trust fund bureau sells off government bonds to make up for the outflow of funds at its disposal as postal savings mature. Sanwa Research estimates that an annual increase of 10 trillion yen in bonds on the market will drive up long-term rates by 5 basis points.
Rising interest rates will make it harder for companies to raise funds to finance their operations and capital investment. The Bank of Japan has agreed to buy government bonds on fears that a concentrated bond sell-off would push up long-term rates.
Long-term rates are now settled. But Atsushi Mizuno, chief strategist at Deutsche Securities Ltd., Tokyo Branch, says: "Upward pressure on long-term rates is building now, given the planned issuance of long-term zaito bonds from fiscal 2001."
At the same time, an official at the Economic Planning Agency discounts the alarmist scenario. "If depositors act rationally," the upcoming rush of time deposit account maturities "will not likely change the overall consumption picture dramatically," this official says.
(The Nihon Keizai Shimbun Saturday morning edition)
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JAPAN: OCT-DEC GDP POSTS 3RD LARGEST CONTRACTION - Monday, March 13, 2000
TOKYO (Dow Jones) - -The Japanese economy posted the third largest contraction ever in the October-December period of 1999 - minus 1.4% on quarter, an Economic Planning Agency official said. Briefing on the latest quarter's gross domestic product figures, the official said as a result of the large contraction, Japan needs to achieve 2% uarter-on-quarter growth in the January-March period of 2000 to achieve its 0.6% growth target for the fiscal year ending March 31.
The margin of contraction was the third-largest after contractions posted after the oil shock in 1974 and after the nation's consumption tax was raised in April 1997, he said. Japan's current account surplus accounted for 2.3% of GDP in the latest quarter.
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Things sure look pretty bleak in the far east. Has to affect us - no matter how crazy & irrational this market is.
Wonder how much lower futures will be in AM vs what we saw earlier this evening?
Cheryl |
