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Japan escapes `March crisis` as fiscal ends
Japan, once again, escaped widely predicted disaster as the curtain closed on another nerve-wracking business year on Friday.
Japan, once again, escaped widely predicted disaster as the curtain closed on another nerve-wracking business year on Friday.
Tokyo's Nikkei 225 share market average ended down 2.72 per cent but was still up 17 per cent from last month -- enough to keep some banks from drowning in losses on their stock holdings as tougher accounting standards kick in from April. "Frankly speaking, I feel relieved," said Japan's chief financial regulator, Hakuo Yanagisawa.
The bond market was also steady, hovering near its strongest levels in 11 weeks. Despite credit rating downgrades during the year by Moody's Investors Service, Standard & Poor's and Fitch, 10-year bonds only lost 12.5 basis points over the period. Five per cent was torn off the yen against the dollar, but the bulk of the fall came between September and December as government officials talked the currency down to give exporters like Sony Corp and automakers a big price advantage. The yen barely moved on Friday, trading at around 132.64 against the dollar in late Tokyo. The relative calm on the last business day of Japan's 2001/02 fiscal year contrasted with fears of a full-blown financial meltdown just seven weeks ago when the Nikkei average scraped 18-year lows.
A sense of deja vu is understandable. In March last year, as the Nikkei plumbed 16-year lows, the government sparked a rebound by announcing a scheme to prod banks to write off their massive bad loans. This year's turnaround can also be put down to government fiddling, specifically a crackdown on short-sellers -- traders seeking to profit from falling share prices. A rebound on Wall Street and signs of a recovery in the U.S. economy also played a big role. But the larger problems in the world's second-biggest economy continue to fester: non-performing bank loans are getting scarier as deflation carves deeper into corporate earnings.
The concern, analysts say, is that the new fiscal year may be a reprise of the old, culminating in another nail-biting few months in the lead up to March 31, 2003.
"Now that this March crisis is very likely to be over, pressure on the government to speed up the process of the policy announcement is already fading," said Shuji Shirota, economist at Dresdner Kleinwort Wasserstein. Bureau Report
The bond market was also steady, hovering near its strongest levels in 11 weeks. Despite credit rating downgrades during the year by Moody's Investors Service, Standard & Poor's and Fitch, 10-year bonds only lost 12.5 basis points over the period. Five per cent was torn off the yen against the dollar, but the bulk of the fall came between September and December as government officials talked the currency down to give exporters like Sony Corp and automakers a big price advantage. The yen barely moved on Friday, trading at around 132.64 against the dollar in late Tokyo. The relative calm on the last business day of Japan's 2001/02 fiscal year contrasted with fears of a full-blown financial meltdown just seven weeks ago when the Nikkei average scraped 18-year lows.
A sense of deja vu is understandable. In March last year, as the Nikkei plumbed 16-year lows, the government sparked a rebound by announcing a scheme to prod banks to write off their massive bad loans. This year's turnaround can also be put down to government fiddling, specifically a crackdown on short-sellers -- traders seeking to profit from falling share prices. A rebound on Wall Street and signs of a recovery in the U.S. economy also played a big role. But the larger problems in the world's second-biggest economy continue to fester: non-performing bank loans are getting scarier as deflation carves deeper into corporate earnings.
The concern, analysts say, is that the new fiscal year may be a reprise of the old, culminating in another nail-biting few months in the lead up to March 31, 2003.
"Now that this March crisis is very likely to be over, pressure on the government to speed up the process of the policy announcement is already fading," said Shuji Shirota, economist at Dresdner Kleinwort Wasserstein. Bureau Report