JAPAN: Tokyo and Taipei stock markets post hefty losses in wake of plunge on Wall Street caused by U.S. sovereign debt downgrade

Record ID: 465336

  • Title: JAPAN: Tokyo and Taipei stock markets post hefty losses in wake of plunge on Wall Street caused by U.S. sovereign debt downgrade
  • Date: 9th August 2011
  • Summary: TOKYO, JAPAN (AUGUST 9, 2011) (REUTERS) TOKYO STOCK EXCHANGE (TSE) BUILDING TSE MARKET CENTRE VARIOUS OF TSE STAFF WORKING ELECTRONIC STOCK BOARD SHOWING NIKKEI AVERAGE AT 8762.12 DOWN 335.44 MORE OF TSE MARKET CENTRE CHIEF JAPAN ECONOMIST AT SOCIETE GENERALE TAKUJI OKUBO (SOUNDBITE) (English) CHIEF JAPAN ECONOMIST AT SOCIETE GENERALE TAKUJI OKUBO, SAYING: "If the problem can be contained to Europe, it shouldn't pose a huge problem for Japan. After all, Europe accounts for only 11 percent of Japanese exports. On the other hand, Japan exports 56 percent of its merchandise to Asia. So long as this emerging part, especially Asia, remains robust, we do not think it poses that serious a risk to Japan." OKUBO SPEAKING (SOUNDBITE) (English) CHIEF JAPAN ECONOMIST AT SOCIETE GENERALE TAKUJI OKUBO, SAYING: "It is not the policymakers' intention to weaken the yen. What they're trying to do is basically slow the pace of yen appreciation, so as the yen strengthens again to 76, 75, 74 against the dollar, we will likely see foreign exchange intervention again and again to slow the pace of yen appreciation." FOREIGN EXCHANGE TRADING FLOOR AT BROKERS GAITAME.COM DEALERS WORKING ELECTRONIC TICKER MORE OF DEALERS WORKING MONITOR SHOWING DOLLAR TRADING AT 77.430 YEN MORE OF DEALERS WORKING TAIPEI, TAIWAN (AUGUST 9, 2011) (REUTERS) PEOPLE INSIDE SECURITIES FIRM MAN WATCHING GRAPH SHOWING AT 09:42 LOCAL TIME, THE TAIWAN MAIN INDEX AT 7159.76 POINTS MONITORS ON THE WALL INVESTORS WATCHING TWO WOMEN TALKING WALL OF MONITORS MONITOR SHOWING TAIWAN MAIN INDEX AT 7191.61 POINTS
  • Embargoed: 24th August 2011 13:00
  • Keywords:
  • Location: Japan, Japan
  • Country: Japan
  • Topics: Economy
  • Reuters ID: LVA9R8YZ8QURMDMI4X617Z3ZORQV
  • Story Text: Japan and Taiwan stock markets posted heavy losses on Tuesday (August 9) following an overnight Wall Street plunge, as investors worried about global economic uncertainty following Standard & Poor's credit rating downgrade of the U.S..
    The Nikkei average tumbled more than 4 percent and fell below the 9,000 mark for the first time since the March 11 disaster.
    Despite relatively cheap valuations, the Tokyo market could not avoid the repercussions of the downgrade, which prompted investors to unload risky assets.
    The Nikkei average dropped 4.0 percent to 8,730.88, while the broader Topix fell 3.9 percent to 752.47.
    Analysts said many investors initially underestimated the potential market impact of the U.S. credit rating downgrade. The Nikkei posted a less severe slide on Monday (August 8), but it now looked vulnerable with new sell orders coming in and the potential for fund redemptions and margin calls.
    However, Chief Japan Economist at Societe General, Takuji Okubo, said the real problem in the long run is at the spreading debt crisis in the euro zone, which has a less direct impact on Japan.
    "If the problem can be contained to Europe, it shouldn't pose a huge problem for Japan. After all, Europe accounts for only 11 percent of Japanese exports. On the other hand, Japan exports 56 percent of its merchandise to Asia. So long as this emerging part, especially Asia, remains robust, we do not think it poses that serious a risk to Japan," he said.
    Okubo also said Japan might see more government intervention to slow down the appreciation of the yen which makes Japanese exports less competitive.
    "It is not the policymakers' intention to weaken the yen. What they're trying to do is basically slow the pace of yen appreciation, so as the yen strengthens again to 76, 75, 74 against the dollar, we will likely see foreign exchange intervention again and again to slow the pace of yen appreciation," he said.
    The Japanese currency was trading at around 77.35 yen against the dollar on Tuesday, close to a four-month high of 76.29 yen hit last week before Tokyo intervened and way off post-intervention levels of more than 80 yen to the dollar.
    The central bank also stepped in, loosening monetary policy by boosting its asset buying scheme by half to 15 trillion yen in a move aimed both at making the intervention more effective and shoring up market confidence.
    Taiwan stocks also plunged more than 5 percent to a 14-month intraday low on Tuesday with Quanta Computer Inc leading tech exporters lower.
    Market sentiment was also hit hard after broad net selling of Taiwan shares by foreign investors on Monday reached T$31.5 billion ($1.09 billion USD).
    At about an hour into trade, the main TAIEX index had slipped 375.07 points to 7,177.73, its lowest intraday level since June 2010.
    Glass, electrical and machinery and tourism sub-indexes all tumbled more than 6 percent. The electronics sub-index was down 5 percent.
    Quanta, the world's biggest contract laptop PC maker, was down by its 7 percent daily limited after reporting July sales.
    The Taiwan dollar weakened by T$0.059 to T$29.084.
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