Shares Rebound After Stock Scandal, Dollar Dives
TOKYO (AP) _ Share prices closed higher today after recovering from news that the presidents of two major securities houses would resign. The dollar dropped sharply against the Japanese yen.
The 225-issue Nikkei Stock Average closed at 23,907.42, up 141.96 points, or 0.60 percent, from Monday’s close. Volume on the first section was estimated at 280 million shares, up from 212.175 million shares Monday.
The dollar closed at 138.38 yen, down 1.39 yen from Monday’s close of 139.77 yen. After opening at 139.03 yen, it ranged between 138.70 yen and 139.05 yen.
The Nikkei finished the morning session down 178.90 points, or 0.75 percent, as individual investors retreated in a continuing reaction to resignation announcements Monday by the presidents of two major brokerages, Nomura Securities and Nikko Securities.
But stocks rallied in the afternoon on buying by investment trusts encouraged by the strengthening yen and a sense that the news of the resignations had played itself out, traders said.
On Monday, the index lost 509.62 points, or 2.10 percent, after the two stepped down amid reports that their firms had arranged loans for an ex-mob boss and had, along with the other two of Japan’s ″Big Four″ brokerages, made questionable compensations to top clients for market losses.
″There was no new scandal news, so we got through OK. People felt the bottom had hit,″ said a trader at Jardine Fleming who spoke on condition of anonymity. ″The worst may be over, but we’re not out of the woods yet.″
Other traders said the market had been oversold since last week and was now recovering on technical factors to approach its ″support level″ of about 24,000 points.
Hiroko Charles, a saleswoman at Barclays de Zoete Wedd Securities, predicted the market will remain quiet until Thursday, when many companies will hold stockholders meetings. Normally quiet stockholders sometimes use such meetings as protest forums.
Investors are anticipating more bad news when the Finance Ministry announces the results of its investigation of small- and medium-sized brokerages for buyback activity.
Currency trading was quiet, with some selling of German marks for yen, as traders watched how the stock market would react to the scandal, said Makoto Aratake, a dealer at the Bank of Tokyo.
In bond dealings, the price of benchmark No. 129 10-year Japanese government bonds rose to 97.54 points as of 5 p.m., up from their 97.49-point finish Monday. Their yield was lower at 6.850 percent from 6.860 percent.