Heavy selling on Friday in Tokyo almost pushed the benchmark Nikkei 225 to its lowest post-bubble close (-9.6% to 7,649 vs. 7,607 set on April 28, 2003). And that’s not all: extended trading of N225 futures in Osaka brought a record session low of 7,100, representing another 520 points to the downside. Sony (JP: 6758) (SNE: 37.62 +0.03%) is said to have ignited the fire with its downward revised earnings forecast (no surprise really, since it’s no secret consumers are hurt and corporate forex projections are far out of whack). It was downhill from there, as deleveraging really took center stage, witnessed in a surge in the yen to a 13 year high and broad indiscriminate selling of equities.
The current levels for the Nikkei and other indices and the yen are unimaginable (the smart bet was for a N225 of 20K+ not <10K to be poised for new post-bubble lows). Worse yet (or better yet if you’ve got any cash left), valuations are far below what they were at the April 2003 trough. If memory serves me correctly, the former Merrill Japan strategist Jesper Koll had thrown out a target of 28K for the N225 by the time of the Beijing Olympics! continue reading…
