JAPAN'S roller-coaster stock market, which registered its second-worst market loss in 1993 earlier this week, is not expected to inhibit continuing gains on the United States stock market or on global stock markets, experts say.
``There's risk in the [Tokyo] market and we're watching it closely. But we don't see Tokyo going into a fall'' at this time, says Reiner Triltsch, a principal with Gulfstream Global Investors Ltd., an international investment management firm in Dallas.
Even if the Japanese stock market, as measured by the Nikkei Index, were to go into free fall, moving sharply below its current level of 16,800 points, it should not adversely effect most global markets, Mr. Triltsch says. The Nikkei tumbled sharply this week because of concerns that the Japanese government will not move swiftly to enact a new economic stimulus package. In March, the Nikkei was just below the 17,000 point range. It moved up to 20,000 points in April before heading down in September.
``So far, there is no sign of a free fall on the Nikkei. The US and other world markets continue to do well in spite of Japan, and that pattern should continue,'' says Hildegard Zagorski, an analyst with Prudential Securities Inc. ``Japan is no longer the big player in the US bond market that it once was, so even if the Nikkei were to slide sharply, the repercussions on US financial markets should not be overly bad.''
Still, global money managers are cautious about committing funds to the Japanese market. Merrill Lynch & Company, for example, is now warning of possible further declines on the Nikkei. Triltsch says his money management firm, with assets of around $100 million, has quietly reduced its participation in Japanese equities. It has gone from an exposure of around 32 percent of its portfolio in August and September, to around 19 percent currently. Gulfstream, which invests in global equities, is affiliated with Creditanstalt Group of Vienna, the leading commercial banking organization in Austria, with assets of more than $50 billion. A Creditanstalt Group subsidiary owns a minority interest in Gulfstream.
GLOBAL money managers have been watching the gyrations on the Tokyo exchange with increasing caution. From a high of almost 39,000 points in late 1989, the Nikkei has dipped down to the 16,800-point level. Yet during that same period, US and many other global markets have continued to post market gains. The Dow Jones industrial average, for example, has climbed more than 50 percent since October 1990.
In the late 1980s, international economists worried that global stock markets would fall together in financial crashes. That happened in October 1987 when stock prices around the world fell in a major market correction. But that broad linkage no longer appears to exist. Triltsch says if Japan were to experience additional market declines, only a few local Asian markets - including Malaysia, Indonesia, and possibly Singapore - would experience significant repercussions.
Triltsch remains upbeat about global investing. In Germany, he notes, many companies are now being forced to move manufacturing facilities to countries such as Poland and the Czech Republic, which have lower labor costs. But that will increase investment possibilities in Eastern Europe in the next few years, he says. ``We really feel that Poland, Hungary, and the Czech Republic [will] develop characteristics'' of the so-called ``little tiger'' nations of East Asia - such as Taiwan and South Korea - that have experienced fast-paced economic growth.
Equities continue to be the focal point of the investment community. A case in point is this week's $1.85 billion acquisition of the Dreyfus Corporation by the Mellon Bank Corporation. Dreyfus is the sixth-largest mutual fund company in the US. Still, the Mellon-Dreyfus linkup is ``unique'' and should not lead to additional mergers between large commercial banks and other mutual fund companies, says Perrin Long Jr., an analyst with First of Michigan Corporation.