Nikkei Stock Plunge 700 pointsgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Friday April 21, 3:14 am Eastern Time
Nikkei hammered ahead of index reshuffle
TOKYO, April 21 (Reuters) - Tokyo's benchmark Nikkei average plunged in late Friday trade as a wave of selling hit the index ahead of a reshuffle in its component stocks next week.
In the last half hour of trade, the average dived by nearly five percent at one point before recovering slightly to close 3.73 percent lower at 18,252.68. The June futures contract fell 390 points to 18,770.
``Large selling orders came in towards late trade and that dragged the index down,'' said Kunihiro Hatae, equities manager at Tokyo Securities. ``Personally, I wasn't too surprised. Things should settle down next week.''
Despite the sell-off in the benchmark index, the broader TOPIX index (^TOPX - news) firmed 0.31 percent to close at 1,634.12.
Other key indices also rose, with the Nikkei 500 closing 2.06 percent higher at 1,620.70 due to heavy buying in large-cap shares being included in the index, such as NTT Docomo and Matsushita Communication Industrial Co Ltd .
Docomo, Japan's largest company by market value, firmed 1.72 percent to 3.55 million yen, while Matsushita shot up 11.75 percent to 19,120.
The Jasdaq over-the-counter index (^JSD - news) extended Thursday's advance, gaining 5.79 percent to 87.69 by late Friday, due to a recovery in Internet-related shares.
``Overall, sentiment's not too bad and the Nikkei's movement was a technical one with heavy index-based buying and selling ahead of Monday's change,'' said a trader at a Japanese brokerage.
Besides the 30 issues to be dropped from the Nikkei 225 from Monday, traders said investors rushed to sell holdings in other index components so they could buy the more expensive issues to be added to the index.
The price-setting formula for the Nikkei will be adjusted so that the value of the new average would be unchanged from Friday's closing price before shares actually begin trading.
While the Nikkei's convulsion in late trade dominated the market's attention, some activity was sparked in individual shares.
Sumitomo Bank Ltd fell 11.42 percent to 1,380 yen while Sakura Bank Ltd rose 4.38 percent to 762, reacting to news of the share-exchange ratio for their merger, which occur next April, a year earlier than previously planned.
-- Carl Jenkins (Somewherepress@aol.com), April 21, 2000
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