FOCUS: Stock market wary of Kamei damage to banks, jitters over yen policy

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TOKYO, Sept. 16 Kyodo -
Market analysts were in unison Wednesday that new Prime Minister Yukio
Hatoyama's appointment of Shizuka Kamei, leader of coalition partner the
People's New Party, as state minister in charge of postal and financial affairs
came as a ''surprise.''
''His push for a moratorium on loan repayments for individuals and small- to
medium-sized firms is quite likely to send serious reverberations through the
market,'' said Tsuyoshi Segawa, an equity strategist at Mizuho Securities Co.,
in reference to Kamei's remarks to reporters Tuesday after his appointment
offer became known.
Similarly, Sanae Hitomi, an economist at the Dai-ichi Life Research Institute,
pointed to losses particularly in banking and other financial issues in late
trading Wednesday, saying, ''Looking at today's stock market, financial shares
reacted negatively due to worries about the new government's monetary
policies.''
''The surprise over Mr. Kamei's post was somewhat reflected in stock prices,''
Hitomi said. The consumer finance sector was the leading decliner on the Tokyo
Stock Exchange on Wednesday, falling 2.63 percent, while banking issues lost
1.85 percent, both underperforming the overall market.
Kamei, a 72-year-old veteran politician, is also known to be a strong opponent
of former Prime Minister Junichiro Koizumi's drive for postal system and other
market-oriented reforms.
While there is concern that investors, especially foreign traders, could
respond negatively to any significant backtracking on deregulatory reforms,
analysts said so far the market is calmly waiting for more details on how the
new government will proceed.
''Right now we don't really know what kind of drastic changes are being
envisioned and we have yet to grasp the administration's real intentions,''
Mizuho's Segawa said. ''So until they present a more concrete plan, it is hard
to say how investors will take it.''
In a more positive light, Makoto Haga, chief strategist at Monex Inc.,
described Hatoyama's inclusion of Kamei and another coalition party leader in
his Cabinet as ''one further step forward,'' because ensuring closer
cooperation would enable smoother implementation of DPJ policies.
Meanwhile, Democratic Party of Japan heavyweight Hirohisa Fujii's assumption of
the post of finance minister appeared more welcome, with Nikko Citigroup Ltd.
saying in a note to clients, ''Mr. Fujii is known as the maven of economic and
financial matters in the DPJ...and is one of the most highly appraised
politicians when it comes to fiscal and taxation measures.''
However, brokers said Fujii's repeated remarks signaling the DPJ's tolerance of
a stronger yen has raised concern that it could hamper Japan's economic
recovery path, which is heavily dependent on the revival of its exporters.
Just after stock trading closed Wednesday, Fujii said he is against intervening
in the currency market for now and that opposing a stronger yen in view of
Japanese exporters is a one-sided idea. This sent the dollar skidding rapidly
into the lower 90 yen level and approaching a seven-month low.
Remarks from Hatoyama and his Cabinet will be closely watched in the near term
as investors seek more clarity on DPJ policies, analysts said.
The market may respond sensitively next week to any specific measures unveiled
by Hatoyama when he makes his diplomatic debut at the U.N. climate change
summit on Tuesday and the Group of 20 financial summit Sept. 24-25, the
analysts said.
==Kyodo
2009-09-16 22:43:56