Nikkei plunges 816 points. ends below 17,000, Down 4000 points since April high

By Risa Maeda

TOKYO, May 11 (Reuters) - Tokyo's benchmark Nikkei average tumbled more than four percent on Thursday, finishing below 17,000 for the first time since September with sentiment rattled by another setback on U.S. markets overnight.

Traders blamed fears of more volatility in U.S. stocks in coming sessions ahead of Tuesday's rate-setting meeting of the U.S. Federal Open Market Committee, especially after a tumble of 5.59 percent overnight in the U.S. Nasdaq composite index (^IXIC - news).

The Nikkei fell more than five percent in late trade before closing down 819.01 points or 4.63 percent at 16,882.46, the lowest since last September 27.

The June Nikkei futures contract <0#JNI:> fell 930 points to 16,810, while the capital-weighted TOPIX index (^TOPX - news) of all Tokyo Stock Exchange first-section shares lost 3.56 percent to end at 1,600.73.

Large-cap high-tech and info-tech shares, often popular among foreign investors, were under heavy downward pressure amid concerns that foreigners could step up their selling, traders said.

Matsushita Electric Industrial Co Ltd , the world's largest maker of consumer electronics, fell 9.09 percent to 2,700 yen. It was the biggest one-day fall for the company in 10 years.

On Wednesday, Matsushita said it expected to post a group operating profit of 190 billion yen for the current business year to next March, up from an actual profit of 159.05 billion yen for the year just ended but below analysts' expectations.

Other major high-tech stocks also slipped, with industry leader Sony Corp falling 3.13 percent to 11,440 yen and info-tech innovator Kyocera Corp down 7.06 percent at 15,150 yen.

Leading Japanese mobile phone service operator NTT Docomo was another loser, falling 6.7 percent to 3.34 million yen.

A large portion of shares in Japan's high-tech sector are now held by foreign investors, making them vulnerable to repatriation of profits when turbulence hits foreigners' home markets, traders said.

http://biz.yahoo.com/rf/000511/bi.html

-- Carl Jenkins (Somewherepress@aol.com), May 11, 2000

Answers

Thursday May 11 3:42 AM ET

Asian Shares Fall After Tech Stock Hit

By Edwin Chan

SINGAPORE (Reuters) - Stock markets across Asia tumbled on Thursday after a sharp decline in U.S. stocks prompted a sell-off that slashed 4.6 percent off Tokyo's Nikkei average.

``What we saw yesterday and what we're seeing again today is a reflection of growing risk-aversion -- globally,'' said Rebecca Patterson, J.P. Morgan's Asian market strategist in Singapore.

European markets were also showing weakness as Asian markets wound down for the day.

U.S. investors shrugged off strong quarterly results from Internet networking giant Cisco Systems, choosing to focus instead on technology valuation concerns.

The Nasdaq index fell 5.59 percent and the Dow Jones Industrial Average dropped 1.6 percent.

Japan's benchmark Nikkei average shed 819 points or 4.63 percent to close just off its intraday low at 16,882.46, after investors unloaded large-cap tech stocks.

It was the first time that the Nikkei had closed below 17,000 since September. Matsushita Electric Industrial Co Ltd, the world's largest maker of consumer electronics, fell 9.09 percent to 2,700 yen. It was the biggest one-day fall for the company in 10 years.

Other major high-tech stocks also slipped, with industry leader Sony Corp falling 3.13 percent to 11,440 yen.

``Tech is hugely important in places like Japan, Korea and Taiwan,'' said Giles Ockenden, an equity strategist at Jardine Fleming Securities in Tokyo.

Foreigners Sell Japan

The Tokyo market was also spooked by data showing foreigners had turned net sellers of Japanese stocks in the month of April, the first time this has happened since September 1998.

Taiwan stocks closed 2.45 percent weaker, leaving the TAIEX index at 8,349.91.

``The Nasdaq impact was much more serious than I had expected,'' said Beyond Asset Management president Michael On.

``Now we have to think seriously whether Wall Street is in a correction phase or it might become a bear market.''

World microchip foundry leader Taiwan Semiconductor, the most heavily weighted share in the market, plunged T$9 to T$179.

Australia's S&P/ASX 200 index closed 1.54 percent down at 2,996.4. Singapore's Straits Times Index was down 2.5 percent in late trading at 2,005.79.

Hong Kong and Korean markets were closed for a holiday.

Among smaller markets, Manila's main share index closed off 1.17 percent at an 18 month trough of 1,505.21 while the Kuala Lumpur Composite Index was down 1.89 percent to 914.80 in late business.

Some analysts said sharp U.S. rate hikes and a strengthening dollar might leave Asia's markets in the lurch, as it could spook investors already uncomfortable with softening Asian currencies.

Dollar Rises Vs Yen

The dollar rose above 110 yen for the first time since March 1 around 0700 GMT on Thursday, taking advantage of a falling Japanese equity market and helped by prospects of higher U.S. rates. That was up more than 0.5 percent on the day.

The euro remained under pressure against the dollar and the yen after failing to sustain an overnight rally.

The market remained cautious about any intervention-related comments from a European Central Bank board meeting scheduled for later in the day.

Above 100 yen to the euro loom large sell orders from Japanese exporters, including car makers.

``Yen strength is hidden in the shadow of a vibrant dollar, but underneath it's still there and every time the euro rallies on the yen it's met by (Japanese) selling,'' said a dealer at a Japanese bank.

At 0700 GMT, the euro was quoted around 90.50/55 cents, moderately down from 90.67 cents in late U.S. on Wednesday, and sharply down from an overnight high of around 91.30.

Most Asian currencies remained under pressure against the dollar.

``Besides the theme of higher U.S. interest rates, the focus for Asian markets right now is also very bad equity market performance and that's leading to portfolio outflows out of Asian countries,'' said Thio Chin Loo, strategist at BNP Paribas Group.

``That's putting a dampener on Asian currencies,'' she told Reuters Television.

http://dailynews.yahoo.com/h/nm/20000511/bs/markets_asia_144.html

-- Carl Jenkins (Somewherepress@aol.com), May 11, 2000.

GOOD NEWS.

The whole works has been way overvalued for too long now. P/E ratios are insane. (P/E = Stock price per share w earnings per share, for those not familiar)

Ten years ago, P/E's of 12:1 were seen as being about as risky as you wanted; 20:1 was seen as 'really out there'.

These days, 250:1 isn't rare at all. A bit of market correction, and a return to the value of *actual earnings*, isn't a bad thing.

-- Chicken Little (panic@forthebirds.net), May 11, 2000.

Sell.

-- semper paratus (here_with@my.pals), May 11, 2000.