Monday, November 29, 1999

Nikkei slips; consumer lenders fall on new rules

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Japan's Nikkei average edged down on Friday but looked set to post gains of some 3 percent on the week, with foreign investors apparently starting to tiptoe back into the market.Shares of consumer lenders like Promise Co slid as new regulations came into effect, including rules limiting how much debt a customer can take on.Market players said that if the Nikkei manages to consolidate gains above 10,000, which has been both a support and resistance level several times over the past year, it may set the stage for a slow grind higher as risk avoidance ebbs."There was talk today that U.S. money may have been buying early this morning, perhaps pension funds, and that the foreign selling may have largely run its course last week," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management."The Nikkei may now start to move slowly upwards, particularly as the end of the quarter approaches and investors start to look forward to quarterly results."Other analysts said European investors also appeared to be buying a bit on Friday, but trade remained relatively thin.Foreign investors sold a net 916.9 billion yen ($10 billion) of Japanese stocks last week, compared with the 75.2 billion yen they sold in the previous week and the biggest outflow in a single week since March 2008, Finance Ministry data showed."It appears some Europeans may be buying today, with worry about the euro zone debt situation having eased after the Spanish bond auction, which also helped buoy the euro," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities."But given how long it's likely to take to solve all the euro zone problems, uncertainty will remain," he added, noting that it will take some time for foreign investor buying to really recover.A robust response to a Spanish debt auction soothed worries about the country's finances and helped send the euro to a three-week high on Thursday, levels near which it was holding steady on Friday.The benchmark Nikkei shed 0.1 percent or 7.08 points to 9,992.32, falling further back from a one-month high of 10,107.52 hit on Wednesday, but looked set to post gains of some 3 percent on the week, which would be the best weekly performance since mid-March.The broader Topix lost 0.5 percent to 883.48."While the immediate euro zone worries about Spanish debt have diminished, as with Greece there's a sense that the real solution to the problems has only been postponed, and this will provoke some uncertainty," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities."But there's no question that risk avoidance has ebbed for now."Yamagishi said the Nikkei's upward trend might be confirmed next week with a challenge of resistance near the 10,200 level, about where the Nikkei's 50-week moving average comes in.In addition, a 38.2 percent retracement from the Nikkei's April high of 11,408.17 and its June low of 9,378.23 comes in around 10,156.Though Yamagishi believes a break above 10,200 could take the Nikkei quickly up to 10,500, other market players say the benchmark faces additional resistance around 10,300, its 200-day moving average. Support was seen holding near 9,800.Chip-linked shares edged higher after Apple Inc touched a lifetime high of $272.90 a day after saying it sold more than 600,000 units of its new iPhones.Chip tester maker Advantest Corp rose 0.9 percent to 2,012 yen and Tokyo Electron rose 0.9 percent to 5,710 yen.But consumer lenders tumbled in the face of the new rules. The firms, once incredibly popular with foreign investors, have already been hit both by regulations that lowered the maximum interest rate they can charge and court rulings forcing them to repay past interest deemed illegally high.Promise shed 5.4 percent to 653 yen, Takefuji Corp dropped 5.6 percent to 285 yen and Acom Co declined 4.3 percent to 1,145 yen. Aiful Corp fell 3.7 percent to 129 yen.(Editing by Edwina Gibbs)(For more business news on Reuters India click
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