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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: Poet who wrote (10083)	3/15/2001 8:21:46 AM
From: Poet	Respond to of 10876

A good story about the turnaround in Japanese trading last night: DJ Tokyo Stocks Log Stunning Rebound On Govt Aid, Bank News TOKYO (Dow Jones)--How does the Japanese stock market spell relief? "P.K.O." The mere whiff Thursday of public funds buying stocks - an old policy dubbed "price-keeping operations" - helped turn a gut-wrenching early fall into a rousing rally. The turnaround in the benchmark Nikkei average - which scaled a breathtaking 718.95-point trading range for the day - also took strength from talk of government guarantees for a proposed share-buying fund and from signs that Japanese banks will bite the bullet and clear huge swathes of bad loans from their books. The Nikkei ended at the day's high, gaining 309.24 points, or 2.6%, to 12152.83, shrugging off a morning rout and sending a strong rebuke to a Wednesday Wall Street selloff that had been prompted by worries over Japanese banks. There was no official confirmation that the government was whispering in the ears of postal savings and insurance fund managers to buy, but that didn't matter. "This morning, people really believed there was PKO, and on the back of that, they bought," said one foreign brokerage trader, who said many of his clients placed buy orders during the midday break. The interventionist policy of "PKO" - practiced regularly through the 1990s as the Nikkei collapsed from its 1989 high of nearly 39000 - has been largely discredited as a long-term means to prop up Japanese equities. But with the market nearing a state of panic as the Nikkei tumbled to 16-year lows just weeks before the end of the fiscal year, portending serious trouble for the shaky financial sector, market participants were looking for any signal that the government was taking the problem seriously. "That's the powerful thing about PKO. People in the market have seen it happen before - the first time it happened back in '92, the Nikkei went from 14000 to 16000 in about a week, and a lot of people remember that," the trader said. In addition, Finance Minister Kiichi Miyazawa suggested the government should guarantee a proposed private-sector fund that would soak up the shares being sold incessantly by banks and companies, which are unwinding mutual shareholdings they have long held to cement business ties. And in what seemed too timely for coincidence, Nikkei News reported at the lunch break that the three lenders merging to form megabank UFJ Holdings planned to take a huge loss to dispose of bad debts. The banks confirmed the Y1.128 trillion loss in a restructuring plan after the stock market closed. 03/15/2001 Dow Jones News Services (Copyright © 2001 Dow Jones & Company, Inc.)