TOKYO'S NIKKEI ENDS AT 20-YEAR LOW

TOKYO (Reuters) - Japanese stocks thudded to a 20-year closing low on Friday, with Toyota Motor Corp and other blue chips hurt by pension fund selling and worries about sluggish demand in the global economy. Auto giant Toyota, top retailer Ito-Yokado Co Ltd and other issues that have a relatively high weighting in corporate pension funds were among the biggest losers. The Nikkei average slid 2.05 percent to 7,816.49, its lowest level since January 1983. It was down 3.19 percent on the week. The broader TOPIX index fell 1.28 percent on the day to 782.25.

"Big stocks like Sony and Toyota are being dumped by pension funds regardless of their fundamentals," said Koichi Seki, equity manager at Chuo Securities' sales department. "Normally this would be regarded as a great chance to buy cheaply, but investors are worried that such selling has still not hit its peak," he added. Seki believes the Nikkei could fall as far as 7,500 by the end of the month, which would be its lowest since late 1982. Toyota shed 3.85 percent to a seven-year low of 2,500 yen, while Ito-Yokado tumbled 7.97 percent to 2,945 yen, its lowest close since November 1987.

Ito-Yokado's fall came a day after it said its group net profit fell 59.8 percent in the business year ended February 28 due to the rising cost of store closures and renovations. Trading was active, with 703 billion yen ($5.88 billion) worth of shares traded on the first section, up 33 percent from Thursday and only the fourth time this year that the total has risen above 700 billion.

Toyota and Ito-Yokado are widely held by corporate pension funds, which are selling stocks to take advantage of rule changes that allow them to return part of their poorly performing pension assets to the state later this year. Daiwa Institute of Research strategist Kazuhiro Miyake estimates the funds will dump around three trillion yen ($25.10 billion) of stocks in the current business year. That's equal to around five times the average daily value of shares traded on the Tokyo bourse. Traders said worries about the pension funds were creating a vicious circle of selling as investors dumped shares, fearful of further falls.

Under rules drafted earlier this year, pension funds may choose to return their obligations in cash or securities. If the funds opt to use securities, they must hand over a portfolio reflecting the makeup of the TOPIX index. That means the funds would have to sell large blue-chip stocks like Toyota, in which they are generally overweight, to get the portfolios they return in line with TOPIX weightings. Sony Corp, the world's biggest consumer electronics maker, was the most active issue by volume and fell 3.58 percent to 3,770. It earlier touched a four-year low of 3,750 yen.

Blue-chip exporters like Sony are also being hurt by worries that global demand will remain sluggish despite the likelihood of a quick end to the war in Iraq. "In the background are worries about the United States economy as the war draws to a close. And I'm not too optimistic about U.S. consumers. I think they are overstretched," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. Among a handful of winners, Chubu Electric Power Co edged up 1.32 percent to 2,300 yen on its defensive status and relatively low weighting in corporate pension funds.

In a recent report, Morgan Stanley strategist Naoki Kamiyama highlighted Chubu, Japan's third-ranked electric power company, as one of the most underweighted stocks in private pension funds. Kamiyama said the electric power and gas sector subindex IEPNG was the second-most underweight sector after banks. The electric power index rose 0.60 percent, one of only seven of 33 sectors to trade in positive territory on Friday. ((Xtra clients: Click on http:/topnews.session.rservices.com to see Top News pages in multimedia Web format. If you can't access this page, ask your IT department to check your Internet firewall settings. To see the technical advisory, click on ($1=119.54 Yen) ($1=119.54 Yen)

We Salute Free Republic's Donors! Be one!

Donate Here By Secure Server

Or mail checks to
FreeRepublic , LLC
PO BOX 9771
FRESNO, CA 93794

or you can use

PayPal at Jimrob@psnw.com

STOP BY AND BUMP THE FUNDRAISER THREAD-
It is in the breaking news sidebar!

The big problem with the Japanese economy is that we don't see stuff made in Japan any more. Remember how almost all TVs, VCRs, and a lot of other electronic stuff were made in Japan? No longer. When was the last time you saw a "Made In Japan" tag on your new items? Now most stuff is made in Korea or China.

3 posted on 04/11/2003 4:29:44 AM PDT by PJ-Comix (A Person With No Sense Of Humor Is Someone Who Confuses The Irreverent With The Irrelevant)

Now most stuff is made in Korea or China.

Things exist that are not made in China!!! Shock and awe! Yes, you're right. The Japanese lost their competitive edge much as we are losing ours. The end result when you're not a producer is poverty. Good point.

We are more of an idea nation. We develop software, services, etc. but let the other countries with low labor costs actually produce "stuff." The Japanese haven't learned this much.

6 posted on 04/11/2003 4:42:31 AM PDT by PJ-Comix (A Person With No Sense Of Humor Is Someone Who Confuses The Irreverent With The Irrelevant)

We are more of an idea nation. We develop software, services, etc. but let the other countries with low labor costs actually produce "stuff." The Japanese haven't learned this much.

An idea and $2.50 will get ya a cup-o-joe at Starbucks! (I outsource all my "idea work" to offshore thinkers - where it is cheaper).

There are two major reason for the continuing implosion of the Japanese financial markets. First, you really don't have a "free" market in Japan, in that companies can fail..they're propped up, by the government, which thus misallocates capital. Japan has been taking the hurt in incremental doses for 20 years, instead of wiping it o0tu at once shot.....Our own markets aren't that far behind because we really haven't cleaned them up...what you've been reading about the financial scandals is the tip of the iceberg..

One more point. Many in Japan are nervous the lasdt few years about NK launching a nuke at Toyko....the markets aren't discounting the threat...

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.