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| Version 0 | Version 1 |
|---|---|
| Japan quake: Nerves over stock market re-opening | Japan quake: Nerves over stock market re-opening |
| (about 7 hours later) | |
| Investors will be watching the Nikkei stock market in Japan when it re-opens on Monday, after it closed down 1.7% after Friday's earthquake and tsunami. | Investors will be watching the Nikkei stock market in Japan when it re-opens on Monday, after it closed down 1.7% after Friday's earthquake and tsunami. |
| The Bank of Japan will also meet to discuss how to ensure market stability. | The Bank of Japan will also meet to discuss how to ensure market stability. |
| Traders will be worried the Nikkei may fall on fears that growth in the world's third-largest economy may slow. | Traders will be worried the Nikkei may fall on fears that growth in the world's third-largest economy may slow. |
| The quake hit just before the exchange closed, so the impact of the disaster was not fully factored in, although Nikkei stock futures did then fall 5%. | The quake hit just before the exchange closed, so the impact of the disaster was not fully factored in, although Nikkei stock futures did then fall 5%. |
| There will also be a focus on how other Asian markets react after the devastating events in the north-east of Japan. | There will also be a focus on how other Asian markets react after the devastating events in the north-east of Japan. |
| Bank of Japan governor Masaaki Shirakawa said the central bank would provide huge amounts of liquidity to the banking system on Monday, in a drive to keep markets stable. | |
| "We will monitor market conditions and plan to provide markets with a lot of liquidity first thing tomorrow morning," he told reporters after attending a meeting of cabinet ministers for discussion on the economy on Sunday. | |
| The Financial Services Agency also confirmed that Tokyo financial markets would operate as normal on Monday. | |
| Budget calls | Budget calls |
| "Stocks will probably fall on Monday, especially of those companies that have factories in the affected areas, but on the whole the sell-off will likely be short-lived," said Mitsuhsige Akino, a fund manager at Ichiyoshi Investment Management. | "Stocks will probably fall on Monday, especially of those companies that have factories in the affected areas, but on the whole the sell-off will likely be short-lived," said Mitsuhsige Akino, a fund manager at Ichiyoshi Investment Management. |
| Analysts cite the example of the stability of the stock markets in Australia and New Zealand after the recent natural disasters there. | Analysts cite the example of the stability of the stock markets in Australia and New Zealand after the recent natural disasters there. |
| "In the medium term, the impact on markets is not likely to be that great," said Arjuna Mahendaran of HSBC Private Bank. | "In the medium term, the impact on markets is not likely to be that great," said Arjuna Mahendaran of HSBC Private Bank. |
| The Bank of Japan will hold a one-day policy meeting on Monday, with one of its priorities being to ensure commercial banks in earthquake-struck regions do not run out of cash in case depositors rush to withdraw money. | The Bank of Japan will hold a one-day policy meeting on Monday, with one of its priorities being to ensure commercial banks in earthquake-struck regions do not run out of cash in case depositors rush to withdraw money. |
| The ruling and opposition parties are also reported to have agreed for further emergency financial measures. | The ruling and opposition parties are also reported to have agreed for further emergency financial measures. |
| "We still don't know the full scale of the damage, but considering what happened after the earthquake in Kobe [in 1995], this will certainly lead the government to compile an emergency budget," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo. | "We still don't know the full scale of the damage, but considering what happened after the earthquake in Kobe [in 1995], this will certainly lead the government to compile an emergency budget," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo. |
| There are concerns over the cost of rebuilding, and the impact it will have on Japan's public finances. | There are concerns over the cost of rebuilding, and the impact it will have on Japan's public finances. |
| Tax issue? | Tax issue? |
| Analysts say the reconstruction expense will have a heavy impact on the government's debt and budget deficit. | Analysts say the reconstruction expense will have a heavy impact on the government's debt and budget deficit. |
| Japan already has the highest level of national debt in the industrialised world. | Japan already has the highest level of national debt in the industrialised world. |
| "As the deficit grows, the government may be forced into raising taxes to make up for that," said Mr Mahenderan. | "As the deficit grows, the government may be forced into raising taxes to make up for that," said Mr Mahenderan. |
| "A raise in taxes could push the economy into recession," he added. | "A raise in taxes could push the economy into recession," he added. |
| However, despite these concerns, many analysts predict that the rebuilding effort may well help boost economic growth. | However, despite these concerns, many analysts predict that the rebuilding effort may well help boost economic growth. |
| "The earthquake will most likely lead to stronger growth in 2011, rather than weaker," said Takuji Okubo of Societe Generale. | "The earthquake will most likely lead to stronger growth in 2011, rather than weaker," said Takuji Okubo of Societe Generale. |