The BOJ will begin buying more than 1 trillion yen of stocks from banks as early as October, the Asahi newspaper reported earlier this week. Officials, including Finance Minister Masajuro Shiokawa, have said the government may use public funds to support debt-strapped banks.
A government economic package, which may include tax cuts of more than 1 trillion yen, will be outlined in October, Prime Minister Junichiro Koizumi said this month.
"The government needs to do its part, even if that means taking drastic measures such as pouring public money into the banking system," said Atsushi Ishii, who helps manage ?7 trillion at Tokio Marine & Fire Insurance Co, Japan's largest insurer.
Much depends on a cabinet reshuffle on Monday. Investors want to see new cabinet members who won't shy away from cleaning up the banking system.
Koizumi will retain Japan's Financial Affairs Minister Hakuo Yanagisawa in his cabinet, Jiji Press reported on Friday.
Yanagisawa has opposed calls to inject public funds into banks.
"We'd like to see him get out of the way, as that will make it easier for the government to push through their reform plans," said Tetsuya Ishijima, a chief strategist at Okasan Securities Co.
Ishijima said that if Yanagisawa isn't selected he may recommend shares of banks and real-estate companies to his clients.
Slowing us demand
Samsung Electronics may fall. The stock with the biggest weighting in the KOSPI index sells about a quarter of its exports to the US.
Hong Kong's exports and Singapore's industrial production grew at their slowest paces in three months in August, signaling US demand for Asian goods has started to weaken, analysts said.
Hong Kong, whose exports exceed its gross domestic product, said shipments rose 5.7 percent from a year ago, less than the 10.5 percent increase expected by economists. Production at Singapore's electronics and other factories rose about 16 percent from a year earlier. Economists had expected a 20 percent rise.
SK Telecom Corp and KT Corp may rise. Their profits are less affected by a slowing US economy or a possible war between US and Iraq, some investors said.
"Telecoms are one of the major defensive stocks -- they are less sensitive to an economic slowdown," Daehan Investment Trust Management's Kim said.
Taiwan stocks may rise, paced by computer makers, on optimism demand for computers and other electronics will rise in the fourth quarter before the year-end holiday.
Asustek Computer Inc (
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