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To: John Mansfield who wrote (22243)	10/25/1998 2:30:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116753

Japanese Stocks Seen Falling Next Week; Retailers May Slip on Low Earnings Tokyo, Oct. 25 (Bloomberg) -- Japanese stocks may fall next week as the nation's gloomy economic prospects spur domestic institutions to sell into the benchmark's seven-percent rally, shedding lenders such as Industrial Bank of Japan, Ltd. and retailers including Daimaru Inc. Economic indicators to be released this week -- including September's unemployment and industrial production figures, and department and chain store sales -- will likely deflate market sentiment. ''The continued ongoing deterioration of the economy could pull the market lower this week,'' said Celia Farnon, an equity saleswoman at Nomura Securities Co. ''Retail numbers are appalling and unemployment is going from bad to worse...and as we go into results season the earnings will be bad at best, quite likely disastrous.'' The benchmark Nikkei 225 stock average rose 6.5 percent, or 854.16 points, to 14,144.70 this week. It could fall as low as 13,500 this week, Farnon said. Short Sale? The market's gains were due in part to foreign investors buying back shares before new short-selling restrictions were put into place last Friday. Short selling refers to borrowing and selling stock in anticipation of a price drop. Investors are now required by law to tell their brokers whether or not a sale is a short sale. According to most interpretations of the new rules, short sellers cannot sell below the previous day's close or at what becomes a new intraday low. Moreover, if the custodian broker has lent out one's stock it still must be declared a short sale. That rule may yet be changed by the TSE, traders said. Concern that the new regulations were at once obscure and punitive led some institutions that had lent out securities to call back their stock, driving clients who had sold them short to buy back the shares to return them to the owners. Foreigners turned net buyers of Japanese equities in the week ending Oct. 16 for the first time in eleven weeks. In addition, a bit of government support for the market in advance of the world's second-biggest initial public offering, of NTT Mobile Communication Network Inc. -- better known as DoCoMo - - shored up the market for the new offering's first trading day on Thursday. ''We had a technical rally based on short covering ahead of the new rules and the successful IPO of DoCoMo,'' said Barry Dargan, managing director of Massachusetts Investment Management Co., which handles $1 billion in Japanese equities. ''None of those things is really sustainable.'' Bank shares among the biggest gainers in the past five days, with the Topix Banking Index climbing 15 percent, will likely slide as domestic institutions unload blocks of cross- shareholdings while the Nikkei is still floating above the 13- year lows touched just three weeks ago. ''Their inclination must be to sell into the rally created by the gaijin (foreigners),'' said Nomura's Farnon. ''The temptation must be very great to unwind cross-shareholdings at considerably more attractive prices than they would have gotten a few weeks ago.'' Even news that eleven of Japan's biggest lenders are interested in accepting part of the 60 trillion yen ($503 billion) government bailout package will likely not sustain gains as investors bet that government money may pull banks back from the brink but it doesn't make them profitable. ''Having excess funds on the balance sheet is good for (the banks), but not enough to make you want to buy them,'' said Massachusetts Investment's Dargan. Moody's Investors Service said it may cut its ratings on four leading banks -- including Japan's biggest lender, Bank of Tokyo-Mitsubishi Ltd. -- as well as Sanwa Bank Ltd., Sumitomo Bank Ltd. and Industrial Bank of Japan Ltd. on concern economic conditions in Japan and the rest of Asia are worsening. Moody's downgrade of retailers Daimaru and Matsuzakaya Co.'s long-term ratings -- already junk status -- after last Friday's market close may weigh on retailers. Corporate earnings season kicks into gear this week with the world's biggest consumer electronics maker, Matsushita Electrical Industrial Co., and the second biggest, Sony Corp., reporting half-year earnings. Any disappointment on the earnings front could depress an already vulnerable market, traders said. bloomberg.com