Tokyo Market: More bankruptcies in sight
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Japanese stocks may be little changed this week as exporters rise on signs that the US economy is continuing to grow while banks fall on concerns that more bankruptcies might be in store for builders.
The Japanese financial markets will be closed on Monday and Tuesday for national holidays. Trading resumes on Wednesday.
Exporters such as Ricoh, as well as domestic industry leaders like drugmaker Sankyo, will probably enjoy an influx of public funds by managers confident about their long-term earnings potential.
Electronics manufacturers and automakers may get a boost from US stocks, which climbed to a four-week high after figures issued on Thursday showed that the American economy expanded with little inflation in the last quarter.
Investors will also continue to target companies that have announced share buybacks.
"Share buy-backs are one of the few bright spots in an otherwise gloomy market," said Nobuaki Kurisu at Toyo Investment Trust Management. "Investors are looking for undervalued companies with solid finances."
Banks may fall as traders sell on speculation that Japan's fragile financial industry could be jolted by another failure. "Credit risks are on everybody's mind," said Shigemi Nonaka at Sakura Investment Management.
"That's why investors are distancing themselves from banks and builders and moving toward quality."
Last week the benchmark Nikkei 225 index fell 2.87 per cent to 15,552.50.
Japanese bonds are likely to continue rising as investors doubt athat meeting of major industrial nations will put pressure on Japan to come up with new measures to boost its economy.
Finance ministers of the G7 industrial nations meet in London on Thursday and Friday. In the months leading up to last week's release of Japan's latest economic package, the US and other nations urged Japan to spur growth. Bonds rose to records last week, as investors doubted that those measures would help.
Last week, the benchmark government bond rose, pushing its yield down 8.5 basis points to 1.435 per cent.
"There are still a lot of people who want to buy bonds,'' said Kenji Saito at Sakura Investment Management. "The government's latest stimulus package isn't likely to help the economy right away and that's giving people confidence to buy bonds."
Copyright: IOS and Bloomberg
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