Japan: Wochenausblick Aktien und FX-Märkte
Sunday, August 31, 2003
Weekly Stock Outlook: Nikkei Likely To Stay Above 10,000
TOKYO (Nikkei)--The stock market is likely to continue on a firm note this week, with the benchmark Nikkei Stock Average remaining above 10,000, many market participants predict.
Though a wave of profit-taking selling is likely to emerge because the market has gained substantially recently, many traders still expect the market to climb further. They also believe a bout of buying is likely to come in to support the market when it starts moving downward.
If good news emerges from abroad, the Nikkei average may post its year-to-date high this week, market sources said.
Last week saw the stock market in Tokyo seesaw in a narrow range, with the upwardly revised U.S. economic growth for April-June and the stronger-than-expected Japanese industrial production in July boosting the market. Meanwhile, selling by domestic institutional investors capped the market's upward momentum last week.
Many still expect the bull market to continue for some time, backed by the prospects of a global economic upturn. If the Japanese corporate statistics for April-June, due out on Thursday, turn out to underscore an uptrend in corporate capital outlays, "that will likely favorably affect the stock market," said Masahiko Sato, an equity marketing manager at Nomura Securities Co.
Also, a majority of market participants still expect foreign investors, who have acted as the main driver of the Japanese stock market thus far, to continue to be net purchasers of Japanese equities for some time.
A new round of selling, stemming from the corporate return of the managed portions of employee pension funds, is due to start on Monday, but increasingly many believe such selling has already run its course.
One possible negative factor is the comments coming from U.S. Treasury Secretary John Snow, who is now visiting Japan and is set to have talks with Prime Minister Junichiro Koizumi and other Japanese officials this week.
"Because the U.S. official is seen to be critical of Japanese authorities' massive interventions into the foreign exchange market, the uptrend in the yen's value may not be stopped during his stay in Japan (slated to last through Tuesday)," said an official at one second-tier securities firm. Yet, some said, "The current levels of yen-dollar exchange rates won't cause many problems for the stock market."
Others said that if long-term interest rates continue to rise, concerns over the future of banking stocks will likely emerge. But even that will likely have only a limited impact on the overall stock market.
The upcoming ruling Liberal Democratic Party's presidential election is also unlikely to have much effect on the stock market, judging from the current situation, analysts said.
(The Nihon Keizai Shimbun Sunday edition)
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Sunday, August 31, 2003
Weekly Forex Outlook: Yen Firm On Foreigner's Equity Purchases
TOKYO (Nikkei)--The yen will likely swing upward vis-a-vis the U.S. dollar this week on expectations that foreign investors will purchase more of the Japanese currency in order to invest in the Japanese stock market, which has been rising lately, analysts say.
The market consensus for this week's exchange rate is 115-119 yen to the dollar.
Market participants are focusing their attention more on the prospects for the Japanese economy rather than the interest rate differential between Japan and the U.S. Investor money will likely shift to yen from currencies of countries where interest rates are higher, some market observers say.
U.S. Treasury Secretary John Snow is due to meet with his Japanese counterpart Masajuro Shiokawa on Monday. Since Snow has repeatedly voiced criticism against intervention in currency markets, Japan's monetary authorities might be compelled to refrain from stepping into the market to curb the yen's ascent. This kind of speculation could add further to the Japanese currency's upward momentum, some analysts say.
(The Nihon Keizai Shimbun Sunday edition)
