Japan

KK · Guru

Japan

KK · Guru

BT, Published January 19, 2006
Japan stabilises, so ST Index rebounds 19 points

SINGAPORE - The Japanese stock market managed a fairly decent rebound today, thus helping the Straits Times Index recoup 19.22 of the 66 points it had lost in six consecutive sessions previously. Keppel, Hongkong Land, and Singapore Airlines contributed the most to the rise in the index to 2,378.52, with notable additions from SPH, SGX, and SembCorp Industries.

In the second line, oil and gas stocks were again in focus, while technology counters and China plays enjoyed selective interest. Overall then, it was a firm and active session that brought respite to a market that had suffered a selling spell that lasted more than a week.

Tokyo's Nikkei Average had plunged 6 per cent on Tuesday and Wednesday, prompting the exchange authorities to take the unprecedented action of truncating trading on Wednesday. This led to spillover selling all round the region.

Not surprisingly, dealers were relieved that the Japanese market managed to stabilise today, especially since forced selling and margin calls could have kicked into high gear had the pressure continued. 'Some clients are still caught but at least this helps,' said one.

Turnover, excluding foreign currency issues, was 1.2 billion units worth $1.03 billion. Excluding warrants, there were 279 rises versus 71 falls in the broad market. Warrant volume was about 250 million units - 21 per cent of overall business - worth $54 million.

The oil and gas sector has been in heavy play this year thanks to firming oil prices, and although the recent correction did drag prices lower, the play resumed today, with the likes of Sky Petroleum, KS Energy, and Federal International again rising in decent volume.

Tech counters have also been popular thanks to hopes among analysts that the sector is finally headed for a rebound. Stocks here include Utac, DMX Technologies, Stats ChipPac, and Chartered. China stocks, in the meantime, have been beneficiaries of the classic 'laggard' theme which says that sooner or later they have to play catch-up with the rest of the market having underperformed for so long. Whatever the case, this benefitted China counters like Celestial Nutrifood, China Sun, China Sky, FibreChem, and Bio-Treat.

Among the blue chips, Keppel's 60-cent rebound to $12.80 added five points to the index, and this was followed by Hongkong Land's US$0.10 rise to US$3.30 which accounted for a further 3.1 points. Within the 50-stock index, 31 rose while 10 fell.

In its latest Emerging Markets Strategy, BCA Research said global monetary conditions remain accommodative and as such, it recommends clients maintain long positions in selected emerging markets as conditions for a bear market do not exist.

'However, investors should realise that some markets are technically overbought and there is a good chance of further corrections,' said BCA, adding, 'we do not foresee a secular peak in emerging market share prices for some time... domestic fundamentals on the whole are solid and it is very unlikely that emerging economies will become a source of negative shocks for the global economy.' -- BT

KK · Guru

BT, Published January 19, 2006

Tokyo sell-off: History repeats itself?

It was exactly 11 years ago on Jan 17 1995 that the Kobe earthquake triggered a collapse in Japan's stock market

FOR those interested in odd coincidences or for those who believe that history repeats itself, here's something to chew on - it was exactly 11 years ago to the day on Jan 17 1995 that an earthquake in Kobe, Japan, triggered a collapse in the Japanese stock market which spread throughout the globe.

Back then it was worries that the billions needed to repair the damage would cripple an already crippled and deflating Japanese economy; 11 years later, it isn't Mother Nature that has hit Japan but, instead, an official investigation into possible dishonest corporate behaviour.

If you like, it's now worries of a Japanese-style Enron or WorldCom scandal that started on Tuesday and yesterday erupted into full-fledged panic selling that prompted the Japanese authorities to halt trading early. Over Tuesday and Wednesday, the Nikkei Average had lost just under 1,000 points or about 6 per cent - almost exactly the amount the Nikkei lost 11 years ago in the immediate aftermath of the earthquake.

The spillover impact of the present Japanese sell-off on the local market has been severe and immediate - after losing 24 points on Tuesday, the Straits Times Index fell a further 17.66 points to 2,359.30 yesterday, bringing the total loss for its six-day losing streak to 68 points. It had previously risen 102 points in 11 days.

All sectors were hit as traders alternated between short-selling and short-covering, the latter activity providing some cushion for the index as the day wore on. DBS was singled out as being one target, first slumping to an intraday low of $16.20 before closing unchanged at $16.40.

The biggest index hit came from Singapore Telecom, whose 5-cent loss at $2.49 came with 40 million shares traded and cut four points off the benchmark.

Technically inclined observers were disappointed at the ease with which the index has lost the 2,400-mark and the 50-per-cent retracement level which, if this had held firm, would have been around the 2,380-mark. Still, there were pockets of interest to keep traders happy. Although China plays suffered, oil and gas stocks, for example, absorbed some of the market's energies with the likes of SPC, Sky Petroleum (formerly SkyChina Petroleum), Pearl Energy, and Federal International posting gains.

Technology stocks enjoyed plenty of trading activity, but it was very much a case of eking out marginal gains or minimising losses in this sector, especially after disappointing results announced by Intel Corp on Tuesday.

Earnings worries and the Japanese selldown were the main factors behind pressure in the futures market on US benchmarks that saw the Dow Jones Industrial Average contract slide 90 points by 5 pm.

Excluding warrants, there were 96 rises versus 249 falls in the broad market. Excluding foreign currency issues, there were 1.2 billion units worth $1.23 billion traded. Non-Sing dollar issues added 16.4 million units.

KK · Guru

CNA, 18-Jan-06

TOKYO : The Tokyo Stock Exchange closed early for the first time ever to prevent a system crash from heavy trading volumes as investors took fright at claims of fraud at Internet trailblazer Livedoor. The exchange operator suspended trading in all shares for the rest of the day at 14:20 (0520 GMT), 20 minutes ahead of the scheduled close of Asia's largest bourse. The Nikkei-225 benchmark index ended the day down 464.77 points or 2.94 percent at 15,341.18 points. It was earlier more than 740 points or 4.7 percent in the red after the bourse warned it might close early.

Livedoor's offices were raided on Monday for suspected illegal securities trading and other wrong-doings and Japanese newspapers carried fresh allegations on Wednesday that the Internet firm cooked the books to hide losses. The firm was founded by the flamboyant 33-year-old Takafumi Horie, a T-shirt wearing dropout who built an Internet empire and had been heralded as the face of a new corporate Japan. "The number of orders and deals done has been increasing today on the exchange and the cases of deals may surpass the volume the system can handle," TSE president Taizo Nishimuro said in a warning to the market. "We inform in advance that we will suspend trading in all shares in the case of the number of executed deals exceeding four million as it would impede the system from continuing to process transactions," he said.

Trading volumes on the Tokyo exchange have risen to record levels on a wave of interest by foreign investors and individuals dealing over the Internet. Concern about the exchange's system has grown since the bourse suffered its worst-ever systems crash in November. On that occasion it managed to resume trading to close at the regular time.

The Livedoor probe has raised concerns about corporate governance and is likely to dim investor appetite for start-up firms in the near term, dealers said. It may also put a damper on companies like Livedoor, that have grown or are seeking to grow their businesses through mergers and acquisitions. "The market is still struggling with the selling pressure spurred by the Livedoor incident," said Hideyuki Suzuki, a strategist at SBI Securities. He added however that the current selling spree is likely to be short-lived as the problems at Livedoor are company specific, with market attention soon likely to refocus on upbeat prospects for the economy. "Now, the market is in panic but we will see it settle down after a while," he added.

The mass-circulation Yomiuri Shimbun reported Livedoor allegedly falsely reported 1.4 billion yen (US$12 million) in parent-level recurring profit for the year to September 2004 by transferring profits from affiliates. The transaction was allegedly made to hide a true figure - a loss of one billion yen, the daily said, quoting anonymous sources. - AFP/de

KK · Guru

CNA, 17-Jan-06

Japan's IT whiz-kid under securities investigation

TOKYO : In under a decade flamboyant, Ferrari-driving tycoon Takafumi Horie built one of Japan's top Internet empires with an aggressive expansion drive that made him few friends in the establishment. But now the 33-year-old's brash style is under a new microscope with public prosecutors overnight raiding the offices of his company, Livedoor, for suspected illegal securities trading.

The scandal around the pudgy, spiky-haired entrepreneur -- who was courted by the premier to run for parliament last year -- caused concern among the government and sent Japanese share prices spiralling downward Tuesday.

If the Livedoor group misled investors, "it would be a matter of concern as it hurts market confidence," said Kaoru Yosano, the economy minister who is also in charge of financial services.

Horie, who has famously declared "All the evils come from aged business managers" and "I will kill newspapers and television", insisted it was business as usual. "I will strive to expand business as I did in the past," he told a news conference, apologizing to investors for any worries they may have. Horie, nicknamed Horie-mon after a Japanese cartoon character, ruled out immediate resignation as Livedoor president but said the group was conducting its own in-house investigation into the allegations. "It would be rather irresponsible to speak about whether I will step down or stay when we are yet to get hold of the current situation," he said.

According to news reports, Livedoor Marketing, an affiliate of Livedoor, allegedly submitted false documents on its purchase of a publishing firm in October 2004. Investigators waited until nightfall before marching into Livedoor's headquarters on the top floor of Roppongi Hills, one of Tokyo's premier business addresses home to some of Japan's leading IT entrepreneurs. Under the glare of the television cameras and about 100 reporters who were tipped off in advance, they then marched to continue the search at Horie's home in the office, shopping and residential complex.

The university drop-out, who eschews a suit and tie in favour of T-shirts, has been criticised for following a ruthless, Wall Street-style of capitalism. He angered many in Japan's corporate old guard when he launched an unsuccessful takeover battle for the nation's most widely watched television network, Fuji Television -- a bid that saw him labelled by critics as a corporate raider. That followed a failed attempt to buy a professional baseball team.

Horie has regularly appeared on television game shows, has written several books on how to be a successful entrepreneur and his picture often appears in the newspapers accompanied by his model girlfriend. He ran for parliament in lower house elections in September last year, backing the reform agenda of Prime Minister Junichiro Koizumi, although he declined the endorsement of Koizumi's Liberal Democratic Party. However, he failed to win a seat and few of his erstwhile political allies were rushing to his aid Tuesday. "It is extremely regrettable. We hope investigation authorities will conduct a thorough probe," said Tsutomu Takebe, secretary general of the ruling party, who made a speech backing Horie in the September elections.

On the Tokyo Stock market Livedoor was under heavy pressure, giving the shares an indicated sell price of 596 yen, against Monday's closing price of 696. The benchmark Nikkei-225 index tumbled by 2.84 percent.

Fast-growing Livedoor has grown into an Internet giant with a market capitalisation of over six billion dollars by offering consumer portal sites and other web services.