| BUSINESSWEEK ONLINE : MARCH 29, 1999 ISSUE | ||||||||
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| NEWS: ANALYSIS & COMMENTARY
Tokyo's Bulls May Soon Run out of Breath Investors may be impressed by the Dow's race to 10,000. But for sheer speed, try the Nikkei. The Japanese index has risen more than twice as fast as the Dow--by 17.5%--since Jan. 1, and by Mar. 17 stood around 16,300. Morgan Stanley Dean Witter equity guru Barton Biggs is among those who think this signals a fundamental turn in Japan's outlook and predicts that the Nikkei will hit 18,000 by the end of the year. The Nikkei typically jumps at this time of year as Japan Inc. closes its books on the Mar. 31 fiscal year. In years past, officialdom has talked up the market, or more crudely rigged it by government purchases of shares, to prevent banks and companies from having to take big losses on their big shareholdings of each other. Then, just as the cherry blossoms arrive in April, the market wilts. KICK-START. Yet foreign money managers, who pumped $5 billion into Japanese equities in February alone, are betting that this time will be different. They cite the new corporate restructurings, an ultra-loose monetary policy and a historic government spending drive to fix the banks and kick-start the economy. Some caution is needed, though. Sure, Sony Corp., Japan Airlines, and other blue chips have unveiled credible makeover plans. But most companies haven't. Despite a $65 billion government cash infusion, ING Barings analyst James Fiorillo figures the big banks won't turn decent profits for years. Overall corporate earnings are expected to fall an average 20% this year, and with Tokyo facing budget deficits, the aid that has helped many sectors could end. Finally, there's the yen. Amid the bullishness--and massive buying by banks--it has risen to 118 to the dollar since early March. But Merrill Lynch & Co. senior economist Ronald Bevacqa figures it will head back to 140 by yearend. That would send the foreign money right back out. By Brian Bremner in Tokyo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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