Japanese shares could face downward pressure next week from profit-taking, as investors keep a close eye on measures by major powers to boost their economies, dealers said Friday.
"Foreign investors coming back next week will likely take profit from the recent gains," said Seiichi Suzuki, strategist at Tokai Tokyo Securities. "Economic data have turned out to be pretty bad both in the United States and Japan," Suzuki said. "The Asian market will remain grim at least until the third week of December."
Over the week to November 28, the benchmark Nikkei-225 index rose 601.48 points, or 7.6 percent, to 8,512.27. The Topix index of all first section shares increased 32.13 points, or 4.0 percent, to 834.82. Market players will closely monitor the long-term recovery plans that US automakers present to Congress next week, analysts said.
But Suzuki said the carmakers' plans in themselves may not be enough to boost the overall stock markets. The carmakers "will inevitably have to unveil more radical restructuring plans regardless of whether (they) get the government aid," he said. Top executives from Chrysler, Ford and General Motors warned Congress last week that the domestic auto industry faces a "catastrophic collapse", asking for help to weather a sharp economic downturn with "bridge" loans.
They were sent away empty-handed and told to return by December 2 with more detailed proposals for long-term recovery in return for government cash. Toshihiko Matsuno, research head at SMBC Friend Securities, also said stocks will see more selling pressure next week, although investors are hoping for good news on economic stimulus efforts.
China has announced an unprecedented four-trillion-yuan (590-billion-dollar) stimulus package, while the European Union unveiled a 200-billion-euro (259 billion dollar) plan this week. US president-elect Barack Obama is preparing an aggressive stimulus package that he plans to launch as soon as he takes office on January 20, while Japan is taking its own steps to boost spending to ease the recession.
"The market is showing resilience in the recent volatility," Matsuno said. "Once these economic measures become more detailed and specific, I think investors will find some positive factors."