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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: Tharos who wrote (543)	11/29/1997 12:15:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 3902

Hi Tauros, my point of view is not that complicated. if it is o'key for Mr. Buffett to look very good on 30 % profit on Salomon deal (After nearly decade of waiting, and waiting and holding) it is o'key to enter Gold investments at the time when even die-hard stock bulls are shaking. If I am wrong and CB will sell some more (they do have another 10 years of gold left if they sell it all) than metal will move not to $800 but perhaps $500 (translation-mining stocks 300-1000%) Why Nikkei is crucial to this line of thought that I subscribe to? It is a biggest threat to a Dollar based power of CB's and Japan's unfolding saga can debased $ in significantly shorter time than a decade. 1998? Separetly: Japan ditches failing banks By RUSSELL SKELTON, Tokyo Japan's Prime Minister, Mr Ryutaro Hashimoto, yesterday officially cut adrift failing Japanese financial institutions when he indicated that his Government would protect depositors - but not the nation's debt-ridden banks. Mr Hashimoto confirmed the major shift from the traditional "convoy" system of protecting failed financial institutions during top level talks with President Clinton at the APEC summit in Vancouver. The new approach - which market analysts argue has been unofficially in place for the past six months - confirms an extraordinary and historic move by Japan to a more deregulated financial system where markets and big investors will decide the fate of institutions. Mr Hashimoto's comments coincided with the collapse of another second tier bank - the Tokuyo City Bank - under the weight of 58.8 billion yen ($673 million) worth of non-performing loans in failed real estate ventures. The Government immedately urged depositors to remain calm and promised to protect deposits. The governor of the Bank of Japan, Mr Yasuo Matsushita, said the bank stood ready to provide funds to bail out depositors and predicted that Tokuyo's closure could result in substantial losses. "The BOJ inspection of the bank found that it had a capital surplus, but the bank will likely have a larger amount of irrecoverable loans," he said. In echoing Mr Hashimoto's words to President Clinton, Mr Matsushita said: "I feel a new age is coming in which financial institutions will be estimated by marketplace principles. It's the inevitable course of events." Part of the reason for Tokuyo's collapse was the steady withdrawal of savings by depositors in recent weeks. It is the fourth institution to fail this month, following the collapses of Sanyo Securities, the Hokkaido Takushoku Bank and Yamaichi Securities - Japan's fourth biggest securities house - which closed on Monday with liabilities of 3.24 trillion yen. Rumors about which financial institutions might next join the financial scrap heap intensified after results were published showing 13 of Japan's 19 major banks - excluding the failed Hokkaido Takushoku Bank - will report massive losses this fiscal year. The banks are planning to write off 7.7 trillion yen worth of non performing loans this year and another 1.6 trillion yen by the March close of the fiscal year. Bad debts are estimated to be a staggering 16.6 trillion yen. Much of yesterday's speculation focused on the Yasuda Trust, which was downgraded by the Standard & Poor's rating agency to junk bond status, and Daiwa Securities which has been accused of illicit "tobashi" deals. Mr Jesper Koll, a senior analyst with JP Morgan Securities Asia, said: "We are in the middle of deep financial compression - as many as one third of Japan's financial institutions will not exist in their current form. "What we are witnessing is that the weak institutions are being withered away; about 8 to 10 per cent of the market. This is the end of the convoy system. It is an historic turning point; it is the emergence of capitalism in Japan." Moody's investor services announced that it was considering lowering the credit ratings of five top banks, a move that would expose them to the savage judgment of the money markets. A Moody's downgrading would lower the combined debt ratings of 21 trillion yen worth of outstanding bonds issued by the five banks. They are the Long Term Credit Bank of Japan, the Nippon Credit Bank which has also been subject to speculation about its continued viability, Mitsui Trust and Banking, Yasuda Trust and the Chuo Trust. Moody's attributed the pending move to continued uncertainty over what bailout policy the Government would adopt to banks with lopsided balance sheets. Tokyo share prices recovered slightly. The Nikkei average of 225 stocks closed at 16,045.55 yen - up 1.12 per cent. The yen firmed slightly, to 127.18 against the US dollar. ÿ