Skidding Japanese Markets Open Lower
Japanese stocks fell in early trading today with the Nikkei touching a 17-year low.
But the banking sector was buoyed by optimism that Financial Affairs Minister Hakuo Yanagisawa will accept a request by the International Monetary Fund to inspect Japan’s banking system.
At midmorning the Nikkei-225 stock average was down 29.41 points, or 0.3%, to 10,684.10 on the heels of a four-day, 5% drop. The Topix index of all shares on the Tokyo Stock Exchange’s first section was off 0.5% to 1,097.92.
Hitachi Ltd. was bid lower after Japan’s largest maker of electronics said Friday it probably will lose money, reversing its original profit target, and will cut 14,700 jobs, about 5% of its work force.
Yanagisawa will meet IMF officials this week.
“There is a great deal of hope among investors that Yanagisawa will be convinced by other nations to take further steps to help solve the industry’s bad-loan problem,” said Kunihiro Hatae, a senior equities manager at Tokai Tokyo Securities Co.
The yen fell for the first day in three against the dollar after Japan Finance Minister Masajuro Shiokawa said he will consult with U.S. Treasury Secretary Paul H. O’Neill about the yen-dollar rate this weekend.
The Group of 7 share the view that currency market movements have been “too rapid” and “none of the G-7 nations consider the current state of foreign-exchange rates to be in OK shape,” Shiokawa said Sunday on a televised business program, indicating Japan intends to weaken the yen.
The yen fell to 119.13 per dollar from 118.80 yen in late New York trading Friday. Against the euro, it was little changed at 108.35 from 108.40 in New York.
Shiokawa’s remarks showed Japan is seriously concerned a stronger yen could hurt the economy and “spurred speculation that Japan may step into the market to sell yen,” said Satoshi Tate, vice president for foreign exchange at Sanwa Bank Ltd. “That will dissuade speculative players from buying yen.”
The government is concerned the yen’s 5% rise against the dollar in August could hamper the economy by eroding exporters’ overseas earnings. Shiokawa said the yen’s rise is partially to blame for Japanese stocks’ drop to a 17-year low last week.
Shiokawa and O’Neill will meet when finance ministers gather at the Asia-Pacific Economic Cooperative in Suzhou, China, this weekend. Shiokawa also said he will ask O’Neill about U.S. policy on the currency markets.
Japanese banking stocks rose after the Tokyo Shimbun newspaper said the central bank may increase its purchase of long-term government bonds to provide more liquidity in the banking system. The Bank of Japan’s next monetary policy meeting will be Sept. 18 and 19.
Some investors hope that an offer by the International Monetary Fund to inspect Japan’s banking system will lead to a more complete disclosure of the current status of banks’ bad loans. The nation’s largest banks had 17.4 trillion yen in bad loans as of the end of March, according to the Financial Services Agency.
Yanagisawa rejected the IMF’s inspection offer Friday. Still, investors will watch his meeting Tuesday with IMF managing director Horst Kohler. Kohler is expected to urge Japan to accept the inspection, according to the Nihon Keizai newspaper.
