Tokyo stocks are unlikely to fall sharply this week as the market expects the government to take necessary action to cope with the nation’s faltering economy.
The benchmark Nikkei Stock Average is expected to move between 12,800 and 13,700 next week, after closing at 12,999.70 Friday, down from 13,214.54 a week earlier.
The Nikkei’s reshuffle, which started March 23, will be completed Tuesday when Mitsubishi Tokyo Financial Group and UFJ Holdings join the index.
Today, the Bank of Japan will release the results of its latest “tankan” quarterly business confidence survey.
“The figures could be particularly bad, as shown by recent economic indicators such as industrial output,” said Kazunori Jinnai, head of the equity department at Daiwa Securities SB Capital Markets Co. But Jinnai thinks poor tankan results will be favorable to the stock market because they could prompt the government to compile a “fine” emergency economic stimulus package.
The government is drafting a set of measures to boost the economy, including ways to accelerate disposal of bad loans and proposals to revitalize the equity market.
Fluctuations on Wall Street may prevent Tokyo stocks from rising sharply next week, but expectations that the government may incorporate satisfactory measures in the package will support their downside, brokers said.
The package is expected to be unveiled this week, by Wednesday at the earliest.
Although stock prices tumbled Thursday, Jinnai believes it was only a “speed adjustment” of the rally that started following the BOJ’s decision March 19 to ease monetary policy in a quantitative manner.
“The quantitative monetary easing has an impact tantamount to that of the ‘zero-interest-rate’ policy introduced in 1999,” he said. “I think the rally can last at least a year or a year and a half.”
However, one broker, who asked for anonymity, said he suspects artificial buying from public funds to be a major factor behind the recent sharp advances.
“Whether or not they will continue buying will be crucial in the formation of the market trend from April onward,” he said.
Average daily trading volume on the Tokyo Stock Exchange this week was 866.10 million shares on the main section, down 42.79 million shares from a week earlier.
Nippon Carbon topped all issues in volume terms and closed the week at 217 yen, up 52 yen, on turnover of 73.56 million shares.
Second was Nissan Motor, closing this week at 790 yen, down 56 yen, on 70.95 million shares traded.
Japan Energy came third, ending the week at 226 yen, up 28 yen, on a volume of 68.58 million shares.
Toshiba was fourth, closing at 732 yen, down 29 yen, on 59.11 million shares traded. Sumitomo Bank ranked fifth and closed the week at 1,120 yen, up 91 yen, on 58.39 million shares traded.
The next five leading shares in terms of volume were Showa Denko, Nippon Steel, Mitsubishi Heavy Industries, Kawasaki Steel and NEC.
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