Tokyo's Nikkei stock index, reeling from its worst week ever, could keep falling unless policymakers take drastic steps to bring the financial crisis under control, analysts said Friday. They said there was no sign of a bottom to the collapsing market after the Nikkei plunged 9.62 percent on Friday. It was the biggest one-day loss since "Black Monday" in October 1987.
Over the week, the Nikkei dived 2,661.71 points, or 24.33 percent, to 8,276.43 - the worst weekly performance in its more than 50-year history. The broader Topix index of all first-section shares tumbled 207.11 points or 19.76 percent to 840.86.
Market watchers were not ruling out further losses for the Nikkei. "Share prices could easily drop below 8,000 if no effective action is taken," said Credit Suisse equity strategist Shinichi Ichikawa. He said governments must protect 100 percent of savings and pump substantial amounts of capital into ailing financial firms.
The market went into a tailspin Friday after Yamato Life Insurance became the first Japanese financial institution to go bust due to the crisis. The Nikkei has more than halved in value since June 2007.
"We can't rule out the possibility of it falling below 8,000," Masayoshi Okamoto, a general manager at Jujiya Securities, told Dow Jones Newswires. Investors were even dumping bonds, which are usually seen as a relatively safe haven when stocks fall. "Japan's financial markets are in total disarray. There is a flight to cash and out of all risk assets," noted RBS Securities analysts.
Markets were hoping for radical action from finance chiefs of the Group of Seven rich nations who meet in Washington later Friday, after emergency interest rate cuts failed to calm the turmoil.
"Policymakers must offer a remedy that goes beyond market expectations," said Toshihiko Matsuno, research head of SMBC Friend Securities.