Armour unmeshed: Japan's stock crash threatens corporate cross-holdings

Article Abstract:

Japanese corporations started selling their cross-holdings on Mar 16, 1992 as the Tokyo Stock Exchange's Nikkei Index breached the psychological level of 20,000. Bank stocks are particularly hard-hit as corporations no longer felt obliged to demonstrate loyalty to banks with the prevailing tight credit situation. Banks, on the other hand, cannot sell their holdings in corporations as they are part of the capitalisation levels mandated by the Bank of International Settlements. Some analysts see these events as the beginning of the unravelling of Japan's "keiretsu" system.

Stock-exchange, Stock exchanges, Statistics, Financial markets, Tokyo Stock Exchange, Keiretsu system

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Interesting rewards

Article Abstract:

Interest rate cuts have forced the yields on the benchmark 10-year Japanese government bonds to drop to 5.4%. Japan's official discount rate fell to 4.5% in Mar 1992, a 1.5% cut from the previous year. Yields are expected to drop below 5% since the Bank of Japan plans further cuts in the ODR within the year. However, three-to-five year bonds are the preferred investments since interest rates are predicted to rise in 1993.

Evaluation, Government securities

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Future shock

Article Abstract:

Stock index futures and options trading in the Tokyo and Osaka stock exchanges is believed to be the major cause of the poor showing of new issues in the Japanese market. The trading is also believed to be the main cause of extreme volatility in the cash market. The two Japanese stock exchanges have set up task forces to find ways of limiting the market disruptions caused by futures and options trading.

Economic aspects, Column, Futures market, Futures markets, Commodity futures, Stock index futures

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