Japan's Nikkei Slides to 2-Decade Low, Led by Nomura; NEC Drops
By Tomoko Yamazaki
Tokyo, April 14 (Bloomberg) -- Japan's Nikkei 225 Stock Average fell to a two-decade low for a second consecutive session. Nomura Holdings Inc. and the largest companies slid on concern corporate pension funds, to minimize investment losses, were selling shares and transferring the proceeds to the government.
The Nikkei fell 64.39, or 0.8 percent, to 7752.10 at the 3 p.m. close in Tokyo. That was the lowest close since Nov. 17 1982, when it finished at 7740.10. The Topix index shed 6.64, or 0.9 percent, to 775.61, just 5 points above the near 19-year low close reached on March 11.
NEC Corp. declined after saying it may sell shares of itself and a chipmaking unit. Benchmarks also fell on speculation that overseas investors were reducing their stake because of slower global earnings and economic growth, some investors said.
``Those big stocks are facing a double whammy of foreign and pension fund-related selling,'' said Yasuo Kamaji, who helps manage the equivalent of $2.5 billion in Japanese equities as a fund manager at Sumitomo Mitsui Asset Management Co. ``Foreigners seem to be throwing their towels in with Japanese equities.''
Nikkei 225 futures for June delivery fell 1 percent to 7770 in Osaka and lost 1.3 percent to 7765 in Singapore.
Some 666 billion yen in shares traded, about 15 percent more than the daily average for the past three months. Nine shares fell for every five that gained on the Tokyo Stock Exchange's first section.
Overseas Investors
Nomura, Japan's largest brokerage, slumped 73 yen, or 6.2 percent, to 1,114, its lowest close since March 10, 1999.
Ito-Yokado Co., the nation's largest general merchandise chain, slid 135 yen, or 4.6 percent, to 2,810. Matsushita Electric Industrial Co., the world's biggest maker of consumer electronics, declined 29 yen, or 3.1 percent, to 898, extending its 9.8 percent slide in the past four sessions.
A law change in April 2001 has allowed companies to give back control of the public portion of their pensions to avoid losses that result when returns fall short of promised levels. The government had contributed the money to fund managers to help inflate their assets so they could earn higher investment returns.
Pension fund managers have been struggling to keep up their performance in a market where the benchmark Nikkei has lost more than three-quarters of its value since reaching the record in December 1989.
The selling of Japan's biggest stocks is increasing because they are widely held by overseas investors. Non-domestic investors account for 28 percent of Nomura's shareholders, while they hold 23.5 percent of Matsushita's shares and 23 percent of Ito-Yokado, according to the Japan Company Handbook.
Investors outside of Japan sold 8.1 million more shares than they bought through 11 brokerages, according to orders placed before the market opened today. That was the sixth time in seven days they placed more orders to sell than buy.
In the week ended April 4, they sold 52.2 billion yen more shares than they bought in trading at the Tokyo, Osaka and Nagoya securities exchanges, exchange figures showed.
NEC, Hitachi
NEC slipped 15 yen, or 4.2 percent, to 340. NEC President Akinobu Kanasugi said on April 11 that, ``raising capital through a public share issue is an option'' the company is considering. The timing of a sale of shares in its chip-making unit, NEC Electronics Corp., would depend on market conditions, he said.
Other computer-related stocks dropped on expectations that U.S. earnings reports may suggest technology spending is slowing.
Hitachi Ltd., Japan's third-largest chipmaker, slipped 12 yen, or 3 percent, to 386. Advantest Corp., the world's biggest maker of equipment used to test computer memory chips, dropped 170 yen, or 4.3 percent, to 3,750.
Earnings
Microsoft Corp., the world's largest software maker, may reduce full-year earnings estimates, Goldman, Sachs & Co. said last week. The company reports quarterly results on Tuesday, as does Intel Corp., the world's biggest chipmaker. Earnings from International Business Machines Corp., the largest computer- services provider, are due later today.
``The earnings don't paint a great picture of a recovery in the technology sector,'' said Sadaharu Nagumo, who helps manage the equivalent of $662 million in assets at Japan Investment Trust Management Co. ``There are worries about a delay seen in the recovery of capital spending with demand being sluggish.''
Nagumo keeps his stake in computer-related shares below the Topix index's weighting and is investing in companies such as Uni- Charm Corp., Japan's third-largest toiletry maker.
quote.bloomberg.com |
