Nikkei plunges to 19-year low

Tuesday, September 3, 2002 TOKYO — Japan Today reported that Tokyo stocks tumbled Tuesday on broad-sector selling launched by speculative investors, sending the benchmark indexes to levels last seen in the early 1980s.

The 225-issue Nikkei Stock Average shed 304.59 points, or 3.20%, to close at 9,217.04 on the Tokyo Stock Exchange, its lowest level since Sept 19, 1983, when it finished at 9,141.25. The broader Tokyo Stock Price Index (TOPIX) of all First Section issues fell 26.12 points, or 2.81%, to 904.24, its lowest close since Dec 25, 1984, when it ended at 898.99.

Brokers attributed the fall to selling by speculative investors running short-term funds who, they say, were frustrated by the long spell of narrow-range trading.

"The Nikkei has stayed in a boxed range between 9,500 and 10,000 since mid-July, and people started to wonder when it will break out of that range, either upward or downward," said Toshihiko Matsuno, an investment adviser at Sakura Friend Securities Co.

"Speculative moves were also seen Monday last week, when the Nikkei rose above 10,000 for the first time since July 30. But the buying failed to spur follow-throughs, so this time they tried to test the downside," he said.

Stocks opened slightly lower, with most investors adopting a wait-and-see stance as the U.S. stock markets were closed Monday for the Labor Day holiday.

The downswing accelerated after 9:15 a.m., dragging the Nikkei under 9,420.85, its closing level on Feb 6 this year. The quote had served as the downside resistance level over the past six months as it was the average's lowest close since Dec 14, 1983.

Selling somewhat eased between late morning and early afternoon, but it surged in the last minute of trading, sending both the Nikkei and TOPIX to close at their intraday lows.

Volume on the main section increased sharply to 742.18 million shares from Monday's 500.58 million.

About 90% of issues listed on the section, or 1,359, were losers while only 80 issues gained and 70 others were unchanged.

All 33 business sectors on the bourse lost ground, with brokerages and banks posting hefty falls of over 5%, surpassing the Nikkei's 3% decline.

"Banks had been relatively firm recently. Their sharp losses today will help create a sense of crisis in the market," said Hiroichi Nishi, equities general manager at Nikko Cordial Securities Inc.

Gas companies suffered the mildest fall as a sector, with Tokyo Gas and Osaka Gas managing to post gains.

Brokers said the scandal at nuclear power plants of Tokyo Electric Power Co is making investors shun power companies in general and lean toward gas firms, believing they will be free of troubles related to nuclear power.

The volume leader was Sumitomo Mitsui Banking, which plunged 48 yen to 556 yen.

Sony was the most heavily traded issue by value, dropping 80 yen to 5,020 yen.

The Second Section index fell 19.02 points to 1,708.22 on a volume of 55.76 million shares. In Osaka, the near-term September Nikkei 225 index futures contract tumbled 270 points to 9,230. (Kyodo News)