Kindgo
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The two strongest monetary units, the dollar and yen.
Our economy is suffering, and now so is Japan's.
Yet the Euro is strong. Do I smell one world money???
http://story.news.yahoo.com/news?tm...kets_japan_dc_4
Tokyo Stocks Plumb 19-Year Lows
Wed Sep 4, 7:24 AM ET
By Jason Szep
TOKYO (Reuters) - Tokyo's Nikkei stock market average plumbed a 19-year low on Wednesday as bank stocks tumbled, putting government policymakers on alert and stoking fears of a financial crisis in Japan as the global economy slows.
The Nikkei average slid for a seventh day, losing 1.54 percent to 9,075.09. Prices of Government debt also fell as investors sold bonds to cover stock market losses, while the yen steadied a day after hitting three-week highs against the dollar.
"It's like staring into a bottomless pit right now," said Kazuyuki Naito, general manager of equities sales at UFJ Tsubasa Securities. "Falls in global stocks are killing us."
Nearly 10 percent of the Nikkei's value has disappeared in a week. The average of 225 stocks, which briefly fell through 9,000 for the first time since August 12, 1983, saw broad-based losses with banks, brokerages and high-tech stocks hit hardest.
Investors seized on disappointing data on U.S. factory business conditions that signaled a slowdown in Japan's top export market and highlighted the threat of a global double-dip recession as euro-zone economies also founder.
Adding to the unease, credit ratings agency Moody's Investors Services issued a report saying Japan's banking system was too weak to withstand market reforms which it said would prove catastrophic if pursued.
Japan's economy was fragile before global equity markets began tumbling. The economy grew just 0.5 percent in the April to June quarter, its first growth in a year. Many economists say that could be Japan's best for all of 2003.
"If share prices stay weak, a fall in consumer and corporate spending will be inevitable," Junichi Makino, a senior economist at Daiwa Institute of Research, said.
Banking shares were bloodied, led by a 7.55 percent drop at number two-ranked Sumitomo Mitsui amid fears that falling stock prices will leave banks with losses when they close their books for the half year to September.
Japanese authorities appeared unbowed and reluctant to shore up stock prices, adding to anxiety among investors who had hoped for a reprise of February when government steps pried the market off 18-year lows in the face of a fiscal year-end banking crisis.
"The complete lack of any kind of policy response from the Japanese government is despairing," Naito said.
The Nikkei has now lost more than three-quarters of its value since 1989 when Tokyo was worth more than the rest of the world's equity markets combined, and a Reuters poll of eight analysts on Wednesday suggested it could bottom out between 8,400 and 9,000.
BANKING FEARS
Still, some analysts said Japan's banks, which are laden with 52 trillion yen ($444 billion) in sour loans and own massive amounts of shares that were bought to seal business ties, are now less vulnerable than in February to equity portfolio losses.
And some economists note that September is historically a difficult month for Japan's stock market.
"In 14 out of the past 17 years, September has seen a serious downturn in the Japanese stock market," said Jesper Koll, chief economist at Merrill Lynch in Tokyo.
Although falling stock prices drain the capital banks need to clean up their bad loans, many can now absorb the losses better this year because they expect to set aside less in provisions on loans to struggling companies.
Japan's top seven banks expect loan loss provisions to fall this year to less than a third of the 7.7 trillion yen ($65.7 billion) they took in the 12 months to last March.
Adding a further buffer, operating margins are improving.
That means the capital-asset ratios that measure a bank's health could remain above the eight percent international standard even if stock prices lurch lower, analysts said, although dwindling stock prices will hamper their efforts to restructure.
"Falling stocks just bring to light the excessive risks banks are saddled with," said Hiroshi Hosoda, an analyst at Rating and Investment Information.
"This adversely hits their already weakened capital and leaves banks with less freedom to cope with other problems."
BROAD MARKET HIT
Tokyo's broader, capital-weighted TOPIX index slithered through 900 for the first time since December 1984, losing 1.97 percent to 886.39 as shares in banks, brokerages and high-tech firms crumbled in the heaviest turnover since June 14.
NTT DoCoMo ( news - web sites) Inc, Tokyo's biggest listed company by market capitalization, slid 4.92 percent to 232,000 on worries over its growth prospects amid a global slump in telecom shares.
The yen steadied against the dollar a day after leaping to three-week highs in the wake of the worst stock market losses on Wall Street since the September 11 attacks. The dollar was trading at 117.64 yen versus 117.01 in late U.S. trading.
Senior finance ministry official Zembei Mizoguchi said the government was sticking to its view of medium-term strength in the U.S. economy.
"The market moves on different factors and it is true that there are some uncertainties," he told reporters.
"But our view remains unchanged... There is no change in the strength of the U.S. economy in the medium term."
Finance Minister Masajuro Shiokawa said a day earlier that the government did not plan to take any action to support stocks, blaming the weakness on turmoil in overseas markets.
Japanese government bonds (JGBs) came under pressure as investors sold bonds to cover losses in the stock market.
As prices fell, the yield on 10-year JGBs rose three basis points to 1.21 percent. (Additional reporting by David McMahon, Risa Maeda, Chikako Mogi, Ritsuko Ando and Linda Sieg) ($1=117.13 Yen)
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God bless,
Kindgo
Inside the will of God there is no failure. Outside the will of God there is no success.
Posts: 4320 | From: Sunny Florida | Registered: Jun 2002
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