Japan's "Big Four" brokers, bruised by a series of huge scandals and the burst bubble of the Tokyo stock market, cut their profit forecasts drastically Wednesday.
One firm, Yamaichi Securities Co., said figures for the first six months of its 1992 fiscal year would probably show the first loss in 28 years.
Nikko Securities Co., Daiwa Securities Co. and Nomura Securities Co. also said profits for the fiscal half-year to Sept. 30 would fall about 70% from the year-ago period.
In issuing revised forecasts, the Big Four acknowledged what everyone in Tokyo already knew: The slumping stock market and the nagging persistence of recent scandals had taken their toll on rosy forecasts issued in May.
"Most brokerages issued forecasts in May which were too bullish," a foreign securities industry analyst said.
Yamaichi predicted a six-month loss of $89.5 million (12 billion yen).
"Lower commission fees due to shrinking stock market volume and lower share prices, plus book losses on our stock holdings, led to the lower forecast," Yamaichi said in a statement.
Hopes for a summer rally evaporated in late June when the Big Four admitted compensating elite clients for millions of dollars in investment losses.
Nomura and Nikko also confessed to business ties with gangsters, devastating the market.
The Tokyo stock market's Nikkei average, while off recent lows, is 9% below May 31 levels and 40% below its 1989 record of 38,915.87.
Volume in the past six months has been about 330 million shares a day against 950 million in the late 1980s--cutting into commission revenue.
Nomura expects sixth-month earnings of $276 million (37 billion yen), down from $834 million (111.79 billion yen) a year ago.
Daiwa sees sixth-month profits of $119 million (16 billion yen) against $516 million (69.21 billion yen) last year. Nikko forecast sixth-month earnings of $74.6 million (10 billion yen) against $250 million (33.61 billion yen).
For the full year ending March 31, 1992, profit forecasts range from a 38% drop at Nikko Securities to a 70% drop at Yamaichi.