Japan's stocks benchmarks may fall next week, reversing their biggest five-day gains in seven months, as earnings from NEC Corp and other computer-related companies will likely show demand remains sluggish.
"The recovery scenario for the technology sector is not yet visible and growth will not be seen before next year," said Atsuhiko Masuda, who helps manage about US$128 million at Invesco Asset Management Ltd. "It's really difficult to predict when things will turn around."
Among companies reporting earnings in the coming week are Yahoo Japan Inc, Toshiba Corp and Nissan Motor Co.
Elsewhere in Asia, Taiwan Semiconductor Manufacturing Co (
South Korea's KOSPI index may extend its biggest weekly gain in 21 months. Samsung Electronics Co may add to Friday's 6.2 percent rally after the world's biggest memory-chip maker said third-quarter profit surged fourfold.
Japanese computer-related companies may signal that demand for personal computers and mobile phones, especially in the US, is slowing, some investors said.
NEC, the world's third-biggest chipmaker, last month lowered its sales forecast for the second half ending March 2003, adding that it may reduce it again because of the poor outlook at its phone business.
Toshiba, the world's No. 2 semiconductor-maker, in April said it expects to post a group net loss of Japanese yen 27 billion in the first half ending Sept. 30 on sales of Japanese yen 2.7 trillion (US$21.5 billion).
Both Toshiba and NEC will report earnings on Friday.
"The weaker sales numbers suggest that the demand drivers are not yet there for technology companies in Japan," said Jeremy Hall, who helps manage about US$3.5 billion in Japanese equities at Henderson Investors Japan KK. "There's not too much to get excited about the growth angle for Japanese companies."
NEC shares have lost 48 percent of their value in the past six months, while Toshiba shares have shed 40 percent.
For the week just ended, the Nikkei 225 Stock Average rose 6.5 percent to 9,086.13, while the broader Topix index added 5.4 percent to 893.95. Both benchmarks completed their best week since March 8.
Nissan, Japan's third-largest automaker, will probably say when it reports preliminary first-half earnings and its full-year outlook on Wednesday, that operating profit rose as sales of new models grew in the US and Japan. Final numbers are due Nov. 19.
Banks such as UFJ Holdings Inc may decline on concern that the government is not acting fast enough to help lenders get rid of bad loans, some investors said. The government's bad-loan task force, led by Minister for Financial Services Heizo Takenaka, is expected to release a mid-term report early next week.
"Recent policy developments are really appalling," said Joji Maki, a senior director at Baring Asset Management (Japan) Ltd, which handles about Japanese yen 430 billion in assets.
"The market is already starting to factor in that the government is going to keep bailing out the zombie companies."
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