Tokyo, Nov. 14 (Jiji Press)–Tokyo stocks are seen moving on a soft note next week, as a deteriorating supply-demand balance is likely to weigh heavily on the key Nikkei average.
“The Tokyo market has a downside risk and the Nikkei may fall below the 10,000 line depending on external factors such as U.S. stocks’ moves and the yen’s possible rise amid a lack of fresh trading clues in Japan,” said Yutaka Miura, equity manager at Shinko Securities Co.
Miura said Wall Street stocks are unlikely to stage a one-sided rally, with investors eyeing the course of scandals over some asset management firms’ improper trading of investment trust funds, as well as geopolitical risks surrounding Iraq.
This week, the 225-issue Nikkei average dropped 461.92 points, or 4.3 pct, to finish Friday’s session at 10,167.06, after the narrow victory of Prime Minister Junichiro Koizumi’s ruling coalition in the general election Sunday fell within market expectations.
The Nikkei’s current correction largely reflects supply-demand factors amid a lack of active buyers as foreign investors opt to sell ahead of the book closings of many hedge funds in November, said Norihiro Fujito, equity strategist at Mitsubishi Securities Co.
Amid decreasing market energy, high levels of outstanding long margin positions weighed down the market. Individual investors who snapped up stocks such as Internet business investor Softbank and banks were hurt in the market tumble and dumped the issues before facing margin calls.
“With Japanese institutional investors seen hugging the sidelines, market activities will be dominated by short-term transactions as announcements of April-September corporate earnings continue next week,” said Fumiyuki Nakanishi, equity strategist at SMBC Friend Securities Co.END
