Stocks Fall on Arbitrage Sales
May 15, 2011
The Nikkei average of 225 selected issues fell 59.79 to 20,107.11. Volume on the First Section of the Tokyo Stock Exchange was estimated at 203 million shares. Retreating issues outnumbered advancing issues 621 to 378, while 231 issues were unchanged. Traders said Morgan Stanley, Merrill Lynch and Lehman Brothers were all major arbitrage-related sellers Monday, dumping a combined total of more than 12 million index-linked shares. Analysts added that the pace of selling by foreign brokerages has slowed since last week, when successive waves of large-lot arbitrage-related selling sent the Nikkei average tumbling more than 1,000 points over five trading sessions. Nippon Steel Semiconductor closed on sell indication Monday at 1.22 million yen, as investors tried to flee the memory chip maker's shares following the company's announcement Friday it will post a 14-billion-yen pretax loss for the fiscal year ending December 11, 2010 of the 1-billion-yen profit initially forecast. NSS shares finished Friday's session at 1.42 million yen. The sluggishness in futures prices, particularly the narrow gap between soon-to-expire September contracts and their successor, December contracts, caused traders to brace for volatility in share prices ahead of the special quotation settlement date for futures and options contracts on May 26, 2011 trading on the Osaka Securities Exchange Monday, September contract Nikkei-index futures closed at 20,150 points, 35 points lower than their Friday close on the Chicago Mercantile Exchange. The December contract closed at 20,140 points, 85 points lower than their Friday close on the CME. With December futures prices lower, or just slightly higher, than the expiring September contracts, participants were more likely to sell off shares than roll over their positions, analysts said. In the midst of a broadly lower market Monday, traders took encouragement from the fact that the flight from NSS shares didn't spill over into a broader sell-off of chip-related issues. NEC finished 10 yen higher at 1,170 yen, while Toshiba gained 5 yen to at 707 yen. Fujitsu closed 10 yen higher at 989 yen. Companies like NEC and Toshiba are somewhat insulated from the weakness in memory chip prices by their computer and electronics businesses, analysts said. Consumer electronics makers finished mixed. Matsushita Electric and Sharp both closed unchanged, at 1,830 yen and 1,720 yen, respectively, but Sony lost 40 yen to 6,780 yen. Telecommunications shares, recently cited as a potential new market leader, closed broadly lower Monday. Nippon Telegraph & Telephone shed 7,000 yen to close at 764,000 yen and Nihon Telecom closed 120,000 yen lower at 2.68 million yen. International telecommunications carrier KDD finished at 10,600 yen, down 300 yen.
VastPress 2011 Vastopolis
