The Tokyo Stock Exchange staged a strong rebound Wednesday amid ringing
reports of a massive rally on Wall Street overnight.
With share prices rising along a broad front, the 225-issue Nikkei average
soared 544.35 points, or 3.3 percent, to end at 16,857.04. The rally
snapped a two-session decline that forced the Nikkei average to give up
1,051.05 points, or more than 6 percent. The broad-based Tokyo Stock Price
Index, which is known as the Topix and covers all issues on the first
section of the TSE, rebounded 43.68 points, or 3.46 percent, to hit
Also buoyed by the news of the Hong Kong market’s strong rebound,
investors returned to the market in search of potential gains. Almost all
major investment sectors, including pension and public fund managers,
foreign investors and domestic institutional investors, jumped on the
buying bandwagon, brokerage officials said.
After steady falls in recent days, a hoard of equities have dropped to
what investors are considering attractive price levels, they said. Yet the
Tokyo market remained skittish, as did Prime Minister Ryutaro Hashimoto.
Appearing before reporters, Hashimoto sounded a cautious note, saying it
remains yet to be seen whether the market’s downward slide has run its
course. He voiced concern that the synchronized global stock market decline
would make bank lending harder to obtain, causing a credit crunch.
Hashimoto said he will soon instruct government-run financial institutions
to provide funds to the private sector without a hitch. “That’s what
government-run financiers are for,” he said.
Bank of Japan Gov. Yasuo Matsushita meanwhile blamed Wall Street’s record
point decline Monday on the Hong Kong stock market’s collapse caused by
fears of a local currency crisis. In talks with Nagoya business leaders,
Matsushita said the central bank will be in close contact with monetary
authorities in other countries to cope with any currency turmoil.
Many analysts voiced skepticism about immediate prospects for the Tokyo
stock market. It remains to be seen whether the Tokyo market has seen the
worst, brokerage officials said, pointing to bleak economic and corporate
earnings prospects and banking institutions saddled with a heavy bad-loan
burden. With these factors apparently at work, the Tokyo market had long
been languishing at a depressed price level before the worldwide stock
market rout spilled over into trading here.