Dow 10,000 ?
or is it Nikkei :)
Asian Stocks: Japan Seen Reaching New Lows Amid Global Economic Gloom
Asian Stocks: Japan Seen Hitting New Lows Amid Global Gloom
Tokyo, Oct. 2 (Bloomberg) -- Japan's benchmark stock index may sink to depths untested since late 1985, led by exporters such as Sony Corp. as tumbling U.S. share prices deepen gloom the global economy is slumping.
Concerns that Japan's financial crisis and emerging-market turbulence may throw a wrench into the U.S. growth machine will likely weigh on market sentiment across Asia today.
Banks will likely join the retreat in Tokyo as investors worry cutbacks in new lending will provoke more bankruptcies -- dealing yet another blow to the country's fragile financial system -- and further loosen cross-shareholding ties between lenders and their customers. ''We're going to test 13,000,'' said Yosuke Mitsusada, a senior fund manager at NCG Investment Trust Management. ''The credit crunch is putting the squeeze on this economy, and we can't count on the U.S. to come to the rescue.''
Exporters such as Sony and Honda Motor Co., which rely on U.S. sales for as much as half of global earnings, may follow down shares on Wall Street amid concern growth in world's largest economy will keep slowing despite an interest rate cut announced Tuesday.
The Dow Jones industrials yesterday dropped 2.7 percent, giving another headache to investors worried the U.S. may not be able to ward off the ills crippling much of the rest of the global economy -- and that a 25-basis-point cut in interest rates prescribed by the Federal Reserve Tuesday isn't potent enough medicine.
Traders also expressed disappointment at news the government may move up implementation of new controls on short-selling of stocks -- or borrowing and selling shares in anticipation of future price declines. The measures, decided in June, were originally scheduled to go into effect on Dec. 1. ''This shows how little faith the government has in this market,'' said Masayasu Sugawara, a senior manager at Marusan Securities Co. ''Instead of trying to put obstacles in the way of sellers, they should be encouraging buyers with policies to get the economy back on track.''
Electronics
Some of the worst losses among exporters will likely be posted by electronics companies after the technology-heavy Nasdaq Composite Index took its steepest fall since Aug. 31, dragged down by Microsoft Corp.
Japanese computer-related companies often trade in tandem with their U.S. counterparts because they compete in similar markets and are enmeshed in a dense network of supplier relationships.
Sanyo Electric Co. may fall following a report it will post a group pretax profit of 16 billion yen for the half year through September -- down 27 percent from the same period last year and 4 billion less than the company's original forecast. Sluggish domestic sales of consumer electronics in Japan dragged down profits, the Nihon Keizai newspaper said.
Banks
Banks may fall beneath record lows for the decade set yesterday as investors fear bad loan write-offs and stock valutation losses will force them to constrict new credit.
Japan's largest banks will reduce new lending as much as 5 percent yen in the year ending March because capital is being depleted by accelerating disposals of bad loans, the Nihon Keizai newspaper reported.
The Nikkei's 12 percent decline through the half year ended Wednesday may have wiped as much as 6 trillion yen ($44.3 billion) off the latent value of portfolios held by the country's largest banks, according to analysts.
Worsening financial conditions forced Sakura Bank Ltd. to raise its capital by 350 billion yen this year by selling new shares to about 25 companies, including Toyota Motor Corp., Mitsui & Co. and Nomura Securities Co., the Nihon Keizai newspaper said.
Tankan
The quarterly ''tankan'' survey released yesterday by the Bank of Japan showed business sentiment hit a four-year low -- and traders say that pall of pessimism will continue to hang over the market as encouraging news remains a scarcity.
The key manufacturers index fell to minus 51 from minus 38 in the previous survey in June, a four-year low exceeding the minus 44 forecast in a Bloomberg poll of economist.
Nikkei 225 futures for September delivery settled overnight in Chicago at 13,040, down from their close in Osaka at 13,150 and in Singapore at 13,140.
The Nikkei 225 yesterday index yesterday fell 209.27 points, or 1.56 percent, to 13,197.1, its lowest since January 1986. The broader Topix index of all shares on the first section of the Tokyo Stock Exchange dropped 27.85 points, or 2.67 percent, to 1015.72.
Around Asia
Asian stocks are likely to fall again today as U.S. and European shares plunged after Japan's ''tankan'' survey showed business confidence at a four-year low and on concerns a call by the International Monetary Fund for lower interest rates globally to stave off recession will go largely unheeded. ''It's just more doom and gloom from Asia and now we're seeing some really concerning falls in Europe, in the DAX and the CAC,'' said Mark Devereux, a New Zealand-based broker with Forsyth Barr. ''It's really disturbing,'' he said, given that Europe's economies had largely resisted the pressures of Asia.
After about 30 minutes of trading, the New Zealand's benchmark Top 40 index fell 17.20 points, or 1 percent, to 1677.34, it's lowest level since June 29, 1993. Within the index 19 stocks fell, two rose and 29 were unchanged.
Following down Wall Street, the Bloomberg 500 index of European stocks slid 4.6 percent, its biggest drop since world markets fell last Oct. 28. Germany's DAX Xetra index dropped 7.6 percent. France's CAC 40 index dropped 5 percent.
In New Zealand, Telecom Corp., about 25 percent owned by U.S, phone company Bell Atlantic Corp. and which accounts for about 33 percent of New Zealand's Top 40 index, fell 8 cents to NZ$7.35.
Brierley Investments Ltd., fell 3 cents to 31 New Zealand cents, having earlier traded as low as 30 New Zealand cents, its lowest since the New Zealand Stock Exchange started keeping computerized records in 1986. Its major investment, Thistle Hotels Plc, fell 6 percent to 118.5 pence, its lowest in more than a year.
Australian stocks are expected to fall on the gloomy prognosis of future corporate earnings because of a stagnant economy, traders said. Banks may be sold as concerns about their off-balance sheet liabilities and non-performing loans rise.
Singapore stocks are also expected to fall amid concerns about corporate profit and rising loan defaults. The weakening of the peso against the dollar in the past few days may weigh on Philippine stocks, amid concern the central bank could raise banks' reserve requirements to shore up the currency.
Yesterday Australia's All Ordinaries index fell 0.7 percent to 2569.2. Taiwan's weighted index fell 1.9 percent to 6702.06. |
