Tokyo stock prices collapsed under renewed selloffs Jan. 10, with the Nikkei average plunging below the psychological 18,000 threshold for the first time in 14 months, raising concerns of a market meltdown.The Nikkei average of 225 selected issues ended at 17,303.65, down 770.22 points from Jan. 9. The broader-based Topix index ended at 1,337.03, down 55.15 points. The Nikkei has experienced a drop of more than 2,100 points this week amid serious doubts over the government's ability to carry out deregulatory measures to boost the economy. The index curently stands at less than half the peak it registered in late 1989.Investors are feeling compelled to sell amid fears of a new economic setback believed to be triggered by tax hikes of more than 5 trillion yen this year, including the April rise in the consumption tax from 3 percent to 5 percent, traders said. Most Tokyo Stock Exchange shares came under selling pressure, which on Jan. 10 mainly came from foreign investors and hurt banking issues. Bank stocks have taken a severe battering over the past several days, traders said."The market's downward trend is led by a fall in futures prices," said Yasuo Ueki, general manager of equities operations at Nikko Securities Co. Traders said reflecting weak prospects for the economy, stock futures were sold, unleashing a selloff of cash stocks.Government leaders continued trying to persuade the market that the economy is not in dire straits, but offered no immediate helping hand. Finance Minister Hiroshi Mitsuzuka said the continued bearishness of the stock market is a strong indication that market players want to see more action on the part of the government to implement wide-ranging economic and structural reforms. While saying the economy remains firmly on a recovery path, however, he acknowledged that one reason behind the fall in the key TSE indicator was the unclear outlook for the economy.Koichi Kato, the Liberal Democratic Party Secretary General, blamed the media for the plunge of stock prices. "The media has reported (about Japan's economy) only in a pessimistic way since the start of the new year. I believe that domestic and foreign (market players) have reacted to the flood of such discouraging reports. This has caused the sharp fall of the stock prices," Kato told reporters.Kato said most newspapers have been bent on criticizing the government, saying that the government lacks a sense of urgency for drastic reform. "It is certain that things have begun to change," Kato said. He pointed to the planned sharp increase in the national budget for research and development programs for fiscal 1997 as evidence of change.The government plans to increase R&D expenditure in fiscal 1997 by more than 10 percent from the current fiscal year to help foster new industries. "I think that media reports on this issue have been scarce," Kato said.
