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

To: current trend who wrote (557)	12/2/1997 11:28:00 PM
From: chirodoc	Respond to of 3902

<<<<<<. Don't be to early or you will be burned!------- This is only advice, to myself, to keep me honest. CT ......ct--those are my initials ......i agree. we will find out dec 10 when the new package. my guess is that it will be good but not enough. after hashimoto raised taxes he wouild feel ashamed to admit defeat and then cut taxes. maybe they will rescue the depositers, flood the system with money, and hold a lot of hands. if they get really excited maybe a slight corporate tax cut--but this is unlikely. .......american firms are swooping into japan and setting up all kinds of investment opportunities for the japanese. when they realize they can make more than 1-2% on their money--we will see increased interest in stocks and this will spread to business as mutual fund managers tell the companies they will sink their ship if they don't increase shareholder value--kind of a nippon michael price--this is coming. .....at that point we will see a real acceleration in japanese stock prices, ....until then i agree--we watch.

To: current trend who wrote (557)	12/9/1997 7:41:00 PM
From: current trend	Read Replies (1) \| Respond to of 3902

Possible $77 billion in bonds to recapitalize weak banks-- By JATHON SAPSFORD and DAVID P. HAMILTON Staff Reporters of THE WALL STREET JOURNAL TOKYO -- Japan's government is edging toward using public money to bail out the nation's struggling banks, cheering investors but potentially also contradicting the government's "Big Bang" plan to liberalize its financial markets. Under a plan touted by Seiroku Kajiyama, a top official in the ruling Liberal Democratic Party, the government would issue 10 trillion yen ($77 billion) in bonds and would use the proceeds to help recapitalize weak banks and other financial institutions. Prime Minister Ryutaro Hashimoto told party officials that the plan deserved "serious consideration" and that it should be taken up by an intraparty committee, an LDP spokesman said. Such straightforward policy statements, particularly when echoed by other senior politicians and bureaucrats, are rare in Japan, and suggest that the plan has a serious chance of being enacted. Financial regulators confirmed that the plan is being taken seriously at the Bank of Japan and the Ministry of Finance. Financial markets reacted with enthusiasm to the news. The Nikkei Stock Average of 225 issues closed at 16686.51 on the Tokyo Stock Exchange Tuesday, up 554.94, or 3.44%. Advancers outnumbered decliners 802 to 305 on Tuesday, while 158 issues were unchanged. Volume was estimated at a moderate 470 million shares, up from 425 million Monday. Sale of U.S. Treasurys Possible Also Monday, Japan's bureaucrats sought to play down a politician's statement that Japan might unload some of its U.S. Treasury securities. But some of Japan's private holders of U.S. bonds conceded they may soon give in to the temptation to sell. The senior bureaucrats, who are often more powerful than its politicians, said the move isn't likely, because the benefits don't outweigh the risks of angering U.S. counterparts or knocking down markets. Private Japanese holdings of $291 billion in U.S. government debt -- and at least $100 billion more held by the government -- have long been considered one of the biggest potential threats to the U.S. financial system posed by Japan's financial problems. If Japan's institutions, in an effort to solve problems at home, sell their U.S. bonds and repatriate the proceeds to fix those problems, U.S. interest rates could soar, stunting the U.S. economy. Regarding the potential bailout, discussion of using public funds had centered mostly on protecting depositors at Japanese banks, investors at securities firms and the policyholders at insurance companies. Implicit in the debate was the notion that as long as individual investors were confident that their deposits were safe, the government could let weaker institutions fail -- much as Yamaichi Securities Co. and Hokkaido Takushoku Bank Ltd., Japan's fourth-largest brokerage firm and its 10th-largest bank, did last month. Mr. Kajiyama's plan could mark a major reversal in Japan's stated goal of exposing its financial institutions to more competition and making them pay for their mistakes. Mr. Hashimoto has committed his administration to creating a freer financial market with his reforms of the banking and brokerage industries. But Mr. Hashimoto now seems to be backing away from those promises in an attempt to assure the stability of Japan's financial system. Mr. Kajiyama's plan does include provisions that would force banks to more fully disclose the extent of their bad loans, and would also subject top financial-institution executives to criminal prosecution for their role in creating the bad-loan crisis, although many express doubts about the government's willingness to pursue such measures. Banking Rescue Could Hurt Indeed, to many foreign observers the new plan represents the worst possible scenario for a public rescue because it won't go far enough. By shoring up all weak banks, the government would spare bank managers from the consequences of their profligate lending. By rescuing the banks, moreover, the plan would delay a badly needed consolidation in Japan's banking industry, which analysts have said has suffered from massive overcapacity. "It would be like throwing money down the drain," said Paul Heaton, an analyst at Deutsche Bank Capital Markets (Asia) Ltd. The plan isn't a done deal. Under a rival proposal, the government would allow weak banks and other financial institutions to fail, and then use public money to reimburse depositors for their losses. "There is still a great deal of debate going on in government right now," said one senior regulator. "But the growing consensus is that Japan needs to protect the stability of the financial system" regardless of the setback the latest plan would pose to the deregulation program. Now, however, traditional forces within the LDP appear to be gaining the upper hand. Mr. Kajiyama, a conservative lawmaker with a penchant for making controversial remarks, has for some time argued that the government needed to take greater steps to shore up the financial system before proceeding with Mr. Hashimoto's reforms. Finance Minister Hiroshi Mitsuzuka and Economic Planning Agency chief Koji Omi, both top LDP politicians, said that Mr. Kajiyama's plan would be appropriate -- if supported by the party.