
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 25, 1994                   TAG: 9401250044
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: The New York Times
DATELINE: TOKYO                                LENGTH: Medium

TOKYO'S MARKET TAKES A BIG DIVE

After a solid monthlong recovery, the stock market took a shellacking Monday on concerns that the sudden political crisis could delay for weeks the enactment of measures to revive the battered economy.

Analysts said, however, that the plunge would have been worse were it not for a curious phenomenon: buying support from foreign investors.

After the surprisingly strong defeat of Prime Minister Morihiro Hosokawa's electoral reform package Friday and amid growing concerns that his government might be forced to resign, the Nikkei stock index opened much lower Monday and fell most of the day.

It closed with a loss of 954.19 points, or 4.9 percent, at 18,353.24. That erases about half the gain of the last month.

"The feeling is that the market is going to go much lower," said Robert Sasaki, a trader at Jardine Fleming Securities in Tokyo. "The political worries are very strong."

The selling was so intense that for the first 30 minutes of trading only a tiny handful of the 225 shares that make up the Nikkei index could even open for trading.

The fear has been that as politicians focus on internecine power struggles rather than the recession, the government will be paralyzed. For more than a month, Hosokawa has vowed to take imminent measures, including possible tax reductions and a big increase in public-works spending, to try to put some new life in the economy. Each time, the steps have been delayed, undermining confidence.

Still, some had expected the stock market to fall much farther Monday, particularly after Japanese stocks suffered heavy losses in the London and New York markets Friday after Tokyo trading had ended.

Analysts said one reason the decline was not worse was that foreign investors, who have been heavy buyers of Japanese shares for several months, stepped in to do some bargain hunting.

"There's a balancing act going on," said Richard Koo, a senior economist at the Nomura Research Institute. "Other Asian markets have lost some of their momentum, so people are shifting some of their capital to Tokyo. It's a matter of balance, not optimism, actually."

by CNB