Nikkei marks fresh 17-yr closing low, banks tumble
(UPDATE: Adds volume, more stocks, quotes)
By Kiyoshi Takenaka
TOKYO, Aug 29 (Reuters) - Tokyo's key Nikkei average marked a 17-year closing low on Wednesday after bearish comments on banks' bad
loans from the nation's top financial regulator prompted investors to sell bank stocks such as Mizuho Holdings .
High-tech stocks joined the bank-led slide, with a decline on Wall Street bruising investor
sentiment, already shaky on fading corporate profits and a softening economy.
The benchmark Nikkei ended down 209.64 points or 1.87 percent at 10,979.76, below the
11,000 mark for the first time since October 1984. The Nikkei has lost 72 percent since its
all-time high marked in December 1989.
The broader TOPIX index (^TOPX - news) fell 23.39 points or 2.03 percent to 1,126.86.
``We are possibly facing one of the worst periods, with profit warnings likely to come out
some more, and banks and corporations are stepping up unloading of cross-held shares
into September,'' said Yoshihisa Okamoto, senior vice president at Fuji Investment
Management.
``Without decisive policy action by the government, 11,000 will be just a passing point.''
Fuji Investment manages 217 billion yen ($1.81 billion) of investment trusts.
Unloading of shares held between banks and manufacturers, known as cross-held shares, is expected to pick up pace in the next few weeks
ahead of book closing at the end of September, when a mark-to-market accounting method is set to be introduced.
Mizuho, the world's largest bank by assets, lost 6.89 percent to 500,000 yen, giving back part of its 12.6 percent gain made over the past three
sessions, and UFJ Holdings Inc dropped 5.1 percent to 633,000.
The heavy sell-off came after Financial Services Minister Hakuo Yanagisawa said late on Tuesday that the outstanding balance of bad loans at
major banks would likely remain near current levels through fiscal 2003.
``I think what Yanagisawa displayed was a realistic, soft-landing scenario,'' said Hironari Nozaki, a banking analyst at ABN Amro in Tokyo.
``Still, the pace of progress looks to be too slow to satisfy market participants, who took it as a sign that the sector's woes will not end any time
soon.''
TOSHIBA BUCKS TECH DOWNTREND
Wednesday's decline was broad-based, with losers outnumbering gainers 1,019 to 313 on the Tokyo Stock Exchange's (TSE) first section.
Trading was subdued with 648.92 million shares changing hands, down from Tuesday's 694.24 million.
Tech bellwether Sony Corp fell 1.73 percent to 5,690 yen, while electronic device maker Hitachi Maxell Ltd , which on Wednesday became the
latest technology firm to cut its earnings forecast, sank 5.4 percent to 1,523 yen.
A rare bright spot in the high-tech sector was Toshiba Corp , which gained 1.15 percent to 615 yen as investors gave a cautious thumbs-up to its
massive restructuring plan announced on Monday.
Toshiba, the second most-heavily traded issue on the first section, managed to gain ground despite cuts by Moody's Investors Service and
Standard & Poor's in their ratings outlook for the top chipmaker.
``I'm quite encouraged by a lot of the restructuring news that we've seen this week so far,'' Fiachra MacCana, head of equity research at West
LB Panmure, told Reuters Television.
``I think we'll still see some bad earnings news released throughout September, but if indeed they are accompanied by restructuring news as
we've seen so far I think they've given us a great opportunity to actually buy into the market at these levels.''
REFORM THEME
In the broader market, investors picked up issues seen to benefit from Prime Minister Junichiro Koizumi's policy measures.
Road paver Seikitokyu Kogyo Co Ltd , expected to gain from the government's emphasis on urban revitalisation, surged 41.67 percent to 170
yen, becoming the top percentage gainer on the first section.
Looking ahead, Tokyo stocks are likely to be hit with more negative data in coming weeks, besides a wave of profit warnings.
Japan's gross domestic product data for April-June, due out next week, is widely expected to show the first contraction in three quarters and
pave the way for an extra budget for this fiscal year to next March.
The Nihon Keizai Shimbun business daily said on Wednesday Koizumi has decided on an extra budget worth about 2.2 trillion yen, but investors
were not impressed.
``I'm not really encouraged by the supplementary budget because it seems to me that it's so small that it's not going to make any difference,''
Richard Jerram, chief economist at ING Barings, told Reuters Television. |
