Tokyo stock watch, week to March 5

Tokyo equities nose-dived in the week to March 5, with a four-dayconsecutive loss and end-week marginal gain. In mid week, the Nikkei 225 sank below the 12,700 mark, the lowest in 15 years, to close the week with a 6.7% plunge. The Topix index also tumbled 5.6%. Technology stocks suffered particularly badly, looking at the US Nasdaq's weakness for a lead. Unwinding of cross-held shares accelerated selling, with foreign investors reportedly turning to net sellers. Also, disappointing January industrial production and unemployment rates, as well as a downswing in the February Consumer Price Index, increased concerns over a weak economy. In addition, the market did not favor the Bank of Japan's discount rate cut, so soon after the early-February cut. The government plans to discuss emergency economic policies, including steps to vitalize the equity market. But, until concrete ways are unveiled, investors are likely to sit on the sideline, being wary of weaker equities. Also, the political arena remains unsettled, with Prime Minister Mori remaining under pressure to resign.

Howver, the pharmaceutical index slipped only 2.1%. Sankyo rallied 7.3%, in response to the 10-year management plan released at an analysts' meeting, with an aggressive target of achieving consolidated sales of 1,000 billion yen ($8.4 billion) by offsetting revenue declines after the patent expiration of Pravachol (pravastatin) in October 2002 in Japan and in October 2005 in the USA, through the launch of NK-104 (itavastatin) jointly developed with Kowa. Chugai edged up on reports that US Chugai Biopharmaceuticals and Immusol agreed on a collaboration which could lead to Chugai's validation of drug target genes relating to cancer metastasis. Shionogi dropped 8.1% in belated response in Tokyo to Pfizer's release in late January of the restricted use of the investigational anti-HIV drug capravirine (S-1153 originated by Shionogi and out-licensed to Agouron, a part of Pfizer) for certain patients due to the finding of vasculitis in an animal toxicology study. Takeda and Dainippon slid 4.4% and 5.1%, respectively, despite positive news on a marketing collaboration for Gasmotin (mosapride), following the recent cancellation of Dainippon's out-licensing to AstraZeneca. Select smaller stocks continued to draw buying. Kaken soared 10.5% in response to the approval of Fiblast (trafermin, recombinant human basic FGF) for skin ulcers. Hokuriku, in which Abbott has a stake via its purchase of Knoll Pharmaceuticals, leapt 7.8% due to favorable consolidated results on growth of Ganaton (itopride), benefiting from the halt in marketing of Johnson & Johnson's cisapride. In contrast, Ono fell back 14.1%, despite approval of a new indication for Opalmon (limaprost) for intermittent claudication with lumbar spinal canal stenosis. Taisho weakened again, with lowered estimates for third-quarter parent recurring income by 5 billion yen 72 billion yen (down 20% year-on-year) due to weak sales of the nutrient drink Lipovitan D and soaring R&D expenses. Mochida erased gains in previous weeks on reported findings of toxic chemicals at its ex-plant site which is under renovation.