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Technology Stocks : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: ghengis2 who wrote (5452)	8/8/2000 4:08:59 AM
From: Edwin S. Fujinaka	Read Replies (1) \| Respond to of 6020

Doubts among the believers are actually healthy at this point. Perhaps policy makers in Japan will actively try to resolve the market downtrend (to the extent that they can) for the reasons stated in this opinion piece: Monday, August 7, 2000 OPINION: Stock Price Increase Key To Bad-Loan Disposal TOKYO (Nikkei)--Japan's disposal of the negative legacy of the long economic recession is at the most difficult stage. It is now liquidating debt-ridden companies after injecting public funds into financial institutions and any misstep could stall the nascent economic recovery. The government's decision to postpone for one month the transfer of nationalized Nippon Credit Bank to a corporate alliance led by Softbank Corp. (9984) has raised suspicions among market participants that the government may shrink from making the tough decisions. In the 10 years through fiscal 1999 ended March, Japanese financial institutions registered 87 trillion yen in loan losses. In addition, in the nine years through fiscal 1998, they suffered 98 trillion yen in losses due to declines in the value of shares they held and, in effect, consumed their financial resources. After some major banks went bankrupt, Japan at last began attempting to stabilize the financial system. The government injected 7.45 trillion yen of public funds into major banks while promoting industry restructuring. Convinced that Japan would dispose of its bad-loan problem, U.S. and other foreign investors put risk money into the country. Japanese financial institutions secured 55 trillion yen in latent profits from stock price increases in fiscal 1999. These funds enabled Japanese banks to start disposing of bad loans in earnest. As of the end of March 2000, major banks were able to cover latent losses on problematic loans with annual net business profits, loan-loss reserves and paper gains on stock portfolios. Stock prices have been falling since the court-led rehabilitation of Sogo Co. (8243) was determined on July 12. A city bank's sell orders amounting to 250 billion yen contributed to the market's decline. Financial institutions had planned to dispose of problem loans in stages on the back of rising stock prices and improved financial health, but general contractors with huge debts are now treated as liquidation candidates by the market. Foreign investors have increased net sales of Japanese shares because they think investment risks in Japan have risen. The government needs to clarify to the nation its general policy of handling the bad-loan problem, first making clear that the disposal of problematic loans has reached the final stage. It should then reveal its blueprint for promoting orderly realignments in industry, including corporate liquidations. And it must also prevent any future corporate failures from worsening the health of financial institutions. It is vital to win over financial markets because making full use of the wealth effect of recovery in the stock market is the only effective means of resolving the bad-loan problem, which has been aggravated by declining asset value since the collapse of the bubble economy. Solving the problem, and thus keeping domestic and foreign investors from deserting Japanese stocks, is paramount. (The Nihon Keizai Shimbun Saturday morning edition)