FOCUS: Japan turns to boost its int'l presence as global equities sink+

TOKYO, Sept. 30 Kyodo - Equity markets across the United States, Europe and Asia collapsed into doldrums following a surprising rebuff of the U.S. government's $700 billion bailout plan to avert a global financial crisis.

But Japan turned to seize the opportunity to change the U.S.-triggered credit
turmoil into a chance to recapture its position in the global financial stage
even as its key Nikkei index plunged over 4 percent to close at the lowest
level in more than three years.
''Japanese financial institutions were unable to enter the global financial
competition for the past 20 years because of the lost decade,'' Atsushi Saito,
president of the Tokyo Stock Exchange, said at a press conference.
''This is finally their chance to take a seat at the world table,'' he said.
Finance Minister Shoichi Nakagawa also emphasized that the risks Japan faced
from the fallout of the U.S. subprime crisis are ''extremely small,'' while
Prime Minister Taro Aso highlighted the lessons the country has learned from
its own grueling decade of financial crisis.
''The learning experience from Japan's extremely difficult period in the 1990s
is being put to use so the country did not get embroiled in a large-scale real
estate bubble'' that has gripped the United States and European countries, said
Akio Makabe, an economics professor at Shinshu University.
But market players said the danger that Japan may still languish into a
recession remained strong as the United States, its largest export market,
struggled to find its way out of a sharp economic downturn.
''As the adverse impact from the U.S.-triggered credit crunch spreads across
world economies, there is a high possibility that Japanese exports will
deteriorate more than initially anticipated,'' said Yasunari Ueno, chief
economist at Mizuho Securities Co.
Already in August, Japan posted a trade deficit of 324.0 billion yen -- the
first red ink figure in nearly 26 years except for January when a seasonal
factor often causes a deficit -- partially due to the U.S. economic slowdown.
On Tuesday, the government also said Japan's industrial production in August
logged the biggest fall since 2001 while its unemployment rate for the same
month rose to the highest level in more than two years.
''In order to avoid repercussions (from the U.S. financial turmoil), Japan
needs to carry out an interest rate cut and enact additional economic stimulus
measures,'' said Daisuke Uno, market strategist at Sumitomo Mitsui Banking
Corp.
Latest figures from the Dai-ichi Life Research Institute also showed that
global equity falls have hit Japanese financial institutions, which are
considered relatively healthy amid recent moves to acquire subprime-battered
U.S. brokerages.
According to the institute, unrealized capital gains from equities held by six
major Japanese banks -- including Mizuho Financial Group Inc. and Mitsubishi
UFJ Financial Group Inc. -- shrank about 1 trillion yen from the end of March
to around 2.8 trillion yen as a result of a global sell-off triggered by the
collapse of Lehman Brothers Holdings Inc.
And even if the U.S. government manages to salvage its bailout package that was
rejected by the House of Representatives on Monday, economists said U.S.
authorities need to carry out more drastic measures such as an aggressive use
of public funds not only to clean up bad assets but to lend low-interest
capital funds to encourage new businesses.
''The current move (to buy bad assets) is only giving a pair of crutches to
someone who is about to fall, but as long as you keep using crutches, the
injury will not get any better,'' Shinshu University's Makabe said.
''If you ask me if this is going to calm the (global) equity markets, the
answer is clearly no,'' he said of the U.S. package.
Mizuho's Ueno also said the U.S. action came too late and expectations are low
that any unpopular, radical revisions to the emergency bill can be expected
before the upcoming U.S. presidential election in November.
''In the long term, this spells the beginning of an end to the unipolar
structure of the global economy centered around the United States,'' Makabe
said.
''Japan is not that damaged so I would say this is a chance'' for the country to
reestablish its manufacturing strength, he said.
==Kyodo