TOKYO -- With Japan's Golden Week holiday over and out, it's time to get back to basics. That means everyone in Tokyo will be doing what everyone in New York is doing -- trying to handicap whether the U.S. Federal Reserve will hike interest rates by 25 or 50 basis points at their mid-May meeting, and whether this hike will rock the already shaky Nasdaq Composite Index.
But for Tokyo traders, that's not all. More than 1,500 companies will be releasing their fiscal 1999 earnings over the next three weeks, no doubt taking the migraines and ulcers that went away during the long spring holiday out of remission.
Amid the earnings rush, many fund managers will be looking closely at the numbers for semiconductor companies, one sector in Japan that is expected to keep booming amid the global mobile phone bonanza. Leading liquid crystal display manufacturers such as
Matsushita Electric Industrial
will be releasing their numbers starting Wednesday. Despite paltry profits -- or losses -- these LCD makers may post for the fiscal year ending March 31, their outlook for the following year is expected to be superb, as the demand for LCDs and other chips used in mobile phones outpaces existing supply.
Demand is not the only reason investors are looking at these stocks. All three are in the revamped
index, Matsushita having been added just a few weeks ago, which means it will be included in many of Japan's new mutual funds' portfolios.
Since the beginning of the year, mutual funds have been the main buyers of stocks in Japan, purchasing 1 trillion yen ($9.3 billion) worth of shares. That's more than double the total net purchases made during 1999. And even though recent market volatility has made some investors think twice before investing, Kathy Matsui, chief strategist at
, says, "Japan's equity culture is just beginning to emerge among Japanese retail investors and their participation in the stock market is likely to increase over time."
Twelve new mutual funds will begin operations by the end of this month. Eight funds are targeting a mixture of growth and value stocks, two funds will pick up only technology shares, while the rest will dip into small-cap and other Asian shares, according to
. So even if one conservatively estimates that half of these funds will pick up shares listed in the Nikkei 225 index, as well as the three chip makers, that's a whole lot of money heading into the market.
Listed below is a quick look at earnings estimates, stock price and recent movements for the three American depositary receipts.
Matsushita Electric Industrial
Group operating profit is estimated to fall 15% from the previous year, to 164 billion yen, with net profits jumping 600%, to 95 billion yen. Parent net profit is estimated at 43 billion yen, down 31% from the previous year.
Posted operating profit is expected to increase for the first time in nine quarters during the October-December quarter due to a rise in LCD sales.
Unlike its rival,
, critics say the firm lacks a clear business strategy. However, the company has made headway in Europe, holding a 15% stake in
, a U.K. firm that runs one of the most successful interactive television services in the world. It also holds a 9% stake in
, a consortium whose software is one of the leading contenders to backup the third generation of mobile phones. These investments and their business strategies will likely be brought back to Japan.
ADRs are down 2% from the start of the year, last traded at 273 3/8.
Expects consolidated net loss of 10 billion yen for fiscal 1999, but estimates that profit will jump to 70 billion or 80 billion yen during fiscal 2000, which ends March 31, 2001.
Increase in income fueled by soaring profit from its Internet network operation and electronic devices, such as LCDs.
One of the few large-cap firms in Japan that has adopted stock options for its directors and senior executives.
ADRs up 17% from the start of the year, last traded at 142 15/16.
Forecasts pretax profit to reach 43 billion yen, up from 15.7 billion yen the previous year.
One of the two companies in Japan making color LCDs. A recent survey by Nikkei Market Access, a unit of
Nikkei Business Publications
, said mobile phones using color LCDs will account for 48% of total phones in Japan this year.
ADRs down 24.1% since the beginning of the year, at 195. (These are very thinly traded.)