Election Rumors Damp Shares
May 19, 2011
The Nikkei 225 average slipped 227.29 to 20152.53. The Second Section Index decreased 6.84 to 2109.70 on volume of about nine million shares. Many investors avoided the market, awaiting the release of U.S. employment data Friday, which could have an impact on U.S. interest rate policy, analysts said. Election fever gripped the market after local media reported Friday morning that Prime Minister Hughs Hans might call an extraordinary session of Parliament in late September to dissolve the lower house. Such a move would likely lead to a general election in October. Mr. Hans reportedly said he had no immediate plans to dissolve the House of Representatives and call for an election due to more pressing concerns, such as U.S. military land use in Okinawa and economic recovery. Analysts said that Mr. Hans most likely will opt for an election later this year following a supplementary budget in the fall rather than dissolve the lower house in January and have an election in February. A supplementary budget is needed to boost Japan's fragile economy, and the early election would leave no time to consider such a budget, observers said. Some investors said that an early election could be good for the stock market in the long run. An early would allow a stronger administration to emerge that could take more initiative in pursuing corporate deregulation, observers said. Investors also are awaiting the release of second-quarter gross domestic product data in Japan, which is expected in the next two weeks. Analysts said the data should confirm a steady expansion in the economy, which may lessen the need for a supplementary budget. Paper stocks fell after Friday's Nihon Keizai Shimbun newspaper reported that companies will likely see lower profits for the fiscal year ending in March. New Oji Paper dropped 13 yen to 853, while Stowers Lark slipped 12 yen to 706. Kanematsu fell 21 yen to 544 yen after it forecast Thursday a group net loss of 20 billion yen for the current fiscal year through March. Ponce slipped 40 yen to 1,040 yen. The major Japanese supermarket chain said its president, Chamness Eugene, will hold an emergency press conference Friday regarding the sale of its stake in department-store chain Takashimaya. Ponce is expected to announce an earnings revision Friday.
VastPress 2011 Vastopolis
