Japan Bond Futures Surge on European Debt Crisis

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
06 May, 2010
New York City

Japanese stocks tumble. Tokyo office vacancy rate rises to record in April. Japan

[R]5:00 AM New York, 7:00 PM Tokyo – Japanese stocks tumble. Tokyo office vacancy rate rises to record in April. Japan’s domestic auto sales climb 33.5% in April.[/R]

Japan’s stocks tumbled the most this year after a three day holiday on concern that a European debt crisis coupled with China’s actions to slow growth could halt the growth in global economy.

As a consequence Bonds rose, pushing 10-year yields to a four month low. Bond futures rose to an eight-week high after European Central Bank Council member Alex Weber said yesterday there is threat of a grave contagion effect from the debt crisis.

The EU further warned that U.K.’s budget shortfall might be the largest in the EU this year.

Commercial RE Co, a Tokyo-based real estate developer, filed today with Tokyo District Court for bankruptcy protection with liabilities of 15 billion yen. As a result Kendrix Inc shares fell the most in three months.

Kendrix holds 29.1% of Commercial RE shares, after the largest shareholder Goldman Sachs with 29.76%.

Toyota Motor Co, the biggest seller of hybrid cars said it has cut production costs of making fuel cell vehicles by nearly 90% since the mid-2000s and maybe able to price its first retail hydrogen model at about $50,000.

The first model will be a sedan with driving range of a gasoline-powered car, said Yoshihiko Masuda, Managing Director for advanced autos in an interview.

Production at the experimental Monju breeder reactor in Tsuruga City, Central Japan was restarted after 14 years after getting clearances from the government, said Tokyo-based spokesman Shinichi Suga by telephone. The reactor had been shut since 1995 after an accident and a cover up.

In Tokyo trading Nikkei 225 Stock Average dropped 3.3% or 361.71 to 10,695.69, and the broader Topix Index decreased 3.1% to 956.72.

In the first section of the Tokyo Stock Exchange 11.7 billion shares worth 932 billion shares were traded and in the second section 235 million shares valued at 3.4 billion yen changed hands.

Of the Nikkei 225 index stocks, 6 rose and 219 fell. Chubu Electric Power led gainers in the index shares with a rise of 6.6% followed by Showa Shell gaining 2.2%.

Tokyo Office Vacancy Rate Rises in April

Miki Shoji Co. reported today that the office vacancy rate for the five wards of Chiyoda, Chuo, Minato, Shinjuku and Shibuya rose 0.07 percentage point to 8.82% in April from a month earlier, rising the most since 1989.

As a result, the average asking rent for the five wards in April fell 0.6% or 110 yen to 18,154 yen per 3.3 square meters from a month ago.

Domestic Auto Sales Gain 33.5% in April

Japan Automobile Dealers Association reported today that the country’s domestic sales of new cars gained 33.5% to 222,095 units in April from the same period a year ago.

Nikkei Movers

Mitsui & Co Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 8.4% followed by Nisshin Steel Co., Ltd of 7.4%, Sumco Corporation 7.2%, Pioneer Corp 6.9% and Isuzu Motors Ltd 6.9%.

Chubu Electric Power Company led gainers in the Nikkei 225 Stock Average with a rise of 6.6% followed by Showa Shell Sekiyu K.K 2.1%, Tokyo Gas Co Ltd 0.7% and Osaka Gas Co Ltd 6.6%.

Other Movers

CMK Corp plunged 9.6% to 629.00 yen after the company’s rating was downgraded to “neutral” from “buy” by UBS AG.

Daido Steel Co., Ltd rose 3.7% to 419.00 yen after the maker of specialty steel products was upgraded to “buy” from “neutral” at UBS AG.

Nintendo Co., Ltd decreased 2.5% to 30,650.00 yen after the video game maker said 2009 sales fell 22% to 1.43 trillion yen from 1.84 trillion yen a year ago. Net profit in the year fell 18% to 228.6 billion yen or 1,787.84 yen per share compared to net profit of 279.1 billion yen or 2,182.32 yen per share a year ago.

NS Solutions Corporation rose 2.2% to 2,178.00 yen after the system consulting services company was upgraded to “buy” from “outperform” by Daiwa Securities Group Inc.

Toshiba Plant Systems & Services Corp added 3.4% to 1,185.00 yen after the plant engineering company had its rating upgraded to “outperform” from “neutral” by Daiwa Securities Group Inc.