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Strategies & Market Trends : Guidance and Visibility -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (77404)	10/13/2002 11:57:26 AM
From: X Y Zebra	Read Replies (1) \| Respond to of 208838

something to consider... forbes.com WEEK AHEAD-Tokyo stocks poised for bounce, Wall St key Reuters, 10.12.02, 11:15 PM ET By Nathan Layne TOKYO, Oct 13 (Reuters) - Tokyo stocks may recover some ground this week on bargain-hunting after hitting a 19-year low but volatility on Wall Street could undercut any gains. Investors say the Nikkei average <.N225> may be poised for a bounce after tumbling 11 percent in the previous two weeks on concerns the appointment of reform-minded Heizo Takenaka as financial services minister would lead to a tough government line on bad loans at banks, triggering a wave of corporate failures. "The stock market has overreacted to Takenaka's appointment and the hard-landing scenario," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. "If Wall Street holds firm, foreigners will stop selling and we should move higher, led by blue chip shares that have suffered badly recently." The Nikkei ended Friday at 8,529.61 after a 19-year low of 8,197.22 earlier in the week. The benchmark's 14-day relative strength index is now below the 30 oversold line at 29, indicating limited downside in the near term. Analysts predicted the Nikkei would move between 8,200 and 9,000 in the four-day week. Japanese financial markets will be closed on Monday for a public holiday. Investors will be hoping Wall Street builds on a 4.2 percent rally in the Dow Jones average <.DJI> on Friday, fuelled by optimism about earnings at International Business Machines Corp (nyse: IBM - news - people) and other bellwether U.S. firms. Honda Motor Co Ltd <7267.T> and other battered auto and technology issues may lead the way in Tokyo. Honda, Japan's second-largest automaker, hit a year-to-date low last Thursday even though the company is expecting a record operating profit in the current business year. Heavy foreign selling has knocked back Honda and other widely held stocks, reflecting the desire of global institutional investors to cut back on risk in overseas markets. "Investors have built up massive amounts of short positions," said Osamu Ishikawa, managing director at Prudential Securities Japan. "If an inflow of good news sparks short-covering, it will be that much easier for the market to turn." GOVERNMENT PACKAGE The Bank of Japan made an urgent call on the government on Friday to fix the sick banks at the heart of a decade of economic stagnation, backing the injection of taxpayers' money as one step to help clean up an estimated 52 trillion yen in bad loans. Heizo Takenaka said his special task force would issue an interim report within a week or two. The market is worried about the fall-out if the government gets tough on problem borrowers, pushing them to the wall. As such, operators want to see the contents of a government package to combat deflation and boost demand. An outline is likely this week, with full details at the end of the month. Some analysts doubt it will help the stock market much. "I don't think the package outline will have anything to hurt stocks, but probably nothing to lift them either," said Masatoshi Sato, equities manager at Mizuho Investors Securities. "The focus will be on what safety net measures are included, although we shouldn't expect much in terms of fiscal stimulus," he added. Prime Minister Junichiro Koizumi has ruled out an extra budget for the moment. The Bank of Japan also said on Friday that it would begin buying stocks directly from the banks, as announced, to help them cut back their huge, risky portfolios and would purchase two trillion yen ($16.2 billion) worth by the end of September 2003. That period could be extended by a year if the target is not hit. Banks may not want to sell at current depressed prices. RETAIL EARNINGS, RESTRUCTURING PLAYS Japan's number-two convenience store chain Lawson Inc <2651.T> will unveil its results for the first half on Tuesday, and a fall in the price of key food products such as rice balls and boxed lunches will have weighed on its bottom line. Lawson will be followed later in the week by Fast Retailing Co Ltd <9983.T> and struggling retailer Daiei Inc <8263.T> as the first-half earnings season for companies whose business year ends in February kicks into full swing. Most Japanese firms end their business year in March and report earnings next month. Japanese companies in general have been cautious in their views about the second half given signs of slowing economic growth. Investors as a result will be more selective in their search for winners, analysts said. "Rather than looking at sectors, the market is taking a closer look at firms that have restructured and are now focusing on niche products or more specific fields," said Reiko Nakayama, head of Marusan Securities' investment strategy division. Among manufacturers, Nakayama said Brother Industries Ltd <6448.T>, a printer and fax maker, was seen as attractive, although its stock has already more than doubled this year. Yokogawa Electric Corp <6841.T> may lure buyers after the Nihon Keizai Shimbun business daily said on Saturday the world's second-largest maker of industrial electronics planned to step up restructuring efforts, closing 15 of its 19 domestic plants. Copyright 2002, Reuters News Service * (disclaimer: i am neither bull or bear, as i am trying to simply day trade for the most part attempting to catch whatever direction the beast goes)