Stocks Plunge, Dollar Slips
TOKYO (AP) _ Tokyo share prices plunged today on disappointment about delays in government action to rejuvenate the economy. The dollar slipped against the Japanese yen.
The 225-issue Nikkei Stock Average dropped 618.97 points, or 3.55 percent - the second largest fall this year - and closed at 16,840.38. On Friday, the average had edged up 0.60 points, insignificant in percentage terms, to 17,459.35.
The Nikkei jumped 8.6 percent in three trading days last week after government officials indicated an economic package - including an income tax cut and measures to encourage land transactions - might be ready as early as Tuesday.
Pessimism returned today after Prime Minister Morihiro Hosokawa told Parliament that no new package for the economy is planned right away.
″There’s a great deal of mistrust in the government’s policies,″ said Kunihiko Hitomi, an analyst at Wako Securities. ″Officials are saying all kinds of different things.″
Unless specific proposals for the economy are announced soon, ″my sense is that the Nikkei will approach its low point on Nov. 29,″ said Hirotsugu Ishii of Yamatane Securities. The Nikkei finished at 16,078.71 on that day, its lowest level in more than a year.
The average has sagged in recent weeks amid a growing consensus that the Japanese recession is failing to respond to all government stimulus efforts and may continue well into 1994.
Hitomi said the recovery last week was mostly from short covering - investors buying back stocks after selling too much during the market’s preceding plunge. Now the short covering is finished and ″there’s basically no energy″ for new buying, he said.
Many investors stayed on the sidelines, awaiting the release this week of gross national product figures for the July-September quarter and the Bank of Japan’s quarterly survey of business sentiment. Volume was estimated at a thin 220 million shares, down from 272 million Friday.
Losers outnumbered gainers 1,020 to 74, while 61 issues were unchanged.
The Tokyo Stock Price Index of all issues listed on the first section was down 46.25 points, or 3.17 percent, to 1,413.86. It had fallen 5.01 points, or 0.34 percent, to 1,460.11 on Friday.
Meanwhile, the dollar closed at 108.18 yen, down 0.67 yen from Friday’s close and below Friday’s finish in New York of 108.52 yen. It opened at 108.28 yen and ranged between 108.13 yen and 108.50 yen.
Dealers said investors unwound overbought positions by selling dollars despite Friday’s announcement of positive U.S. employment figures for November.
A further sharp drop in Japanese stock prices could help the dollar, but it faces selling pressure at 108.50 yen from exporters and life insurers, dealers said.
The price of the benchmark No. 157 10-year Japanese government bonds finished at 109.78 yen, up 0.36 yen. The yield fell by 0.045 percentage points to 3.160 percent.