BOJ Pumps in 2 Trillion Yen to Stabilize Market

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

Bank of Japan injects 2 trillion yen into the financial system. Toshiba annual loss eases to 19.7 billion yen. Toshiba and Panasonic forecast first profit in three years due to increasing demand.

[R]5:00 AM New York, 7:00 PM Tokyo – Bank of Japan injects 2 trillion yen into the financial system. Toshiba annual loss eases to 19.7 billion yen. Toshiba and Panasonic forecast first profit in three years due to increasing demand.[/R]

The Japanese stocks headed for their biggest two day drop since 2008, extending a global rout on concern debt crisis will spread throughout Europe and derail the economic recovery.

The Japanese Prime Minister Yukio Hatoyama said he is very concerned about the fiscal crisis that started with Greece. ‘The Government will take all measures needed’ he told reporters in Tokyo today.

The Bank of Japan said it will pump in 2 trillion yen to help stabilize the market. This emergency measure represents the bank’s first same day repurchase operations since December when Dubai World concerns sparked a global flight out of higher yielding assets.

The three month Tokyo interbank offered rate, or TIBOR, was unchanged at 0.395% following this operation by BOJ.

The yen pared yesterday’s gain and dropped against 15 of its 16 major peers after the Bank of Japan’s statement it will pump in 2 trillion yen and the plan of G-7 nations to hold a conference call today to discuss the Greek debt crisis.

The Group of Seven plans to hold a conference call today to discuss the Greek debt crisis, said Finance Minister Naoto Kan at a press conference in Tokyo today.

Panasonic Corporation, the world’s largest maker of plasma televisions said it expects first annual profit in three years of about 50 billion yen in the 12 month period to March 2011, helped by increasing demand for televisions.

Similarly Toshiba Corporation, the world’s second-biggest flash memory chip maker said it expects first annual profit in three years of about 70 billion yen in the year ending match 2011, helped by demand for semiconductors that store data in mobile phones and other consumer electronic products.

In Tokyo trading Nikkei 225 Stock Average declined 3.1% or 331.1 to 10,364.59, and the broader Topix Index tumbled 2.6% to 931.74.

In the first section of the Tokyo Stock Exchange 14.7 billion shares worth 1 trillion yen were traded and in the second section 360 million shares valued at 4.1 billion yen changed hands.

Of the Nikkei 225 index stocks, 8 gained, 215 fell, and 2 were unchanged. Mitsui Mining & Smelting led gainers in the index shares with a rise of 2.8%.

Bank of Japan Injects 2 trillion in System

Bank of Japan’s Director of the press section Yuichi Adachi said today that the central bank will inject 2 trillion yen into the financial system in an emergency same-day repurchase operation in order to ward off the contagion effects of the Greek debt crisis.

“The Bank of Japan seeks to raise the sense of security in the market by providing ample funds,” said Yuichi.

G-7 to Discuss Greek Debt Crisis

Nikkei News reported today that Japan’s finance minister Naoto Kan said the Group of Seven finance ministers will discuss about the Greek debt crisis today.

However, he noted that the discussions are not likely refer to a falling euro.

“I don''t think the talks will proceed along the lines of reaching an agreement to intervene to buy the euro. I suppose that Europeans will first give us an update on how to deal with the Greek problems and will probably call for our, say, spiritual understanding. I don''t think there will be a specific request for currency market intervention,"" said Kan.

Toshiba Annual Loss Eases to 19.7 Billion Yen

Toshiba Corp. announced today that its loss in the year ended March 31 fell to 19.7 billion yen from a net loss of 343 billion yen a year ago.

The company’s operating profit rose to 117.1 billion yen on cost-cutting measures and resurgent demand for semiconductors.

Toshiba projects a 70 billion yen net profit for the current year through March 2011 on increasing demand for PCs, LCDs and semiconductors.

Panasonic Loss Eases to 103 billion Yen

Panasonic reported today that its net loss eased to 103 billion yen in the fiscal year ending March 31 from 379 billion yen a year earlier.

Operating profit for this fiscal year jumped 161% to190 billion yen from 72.9 billion a year ago.

The group notes that consolidated group sales fell 4% to 7.4 trillion yen from 7.8 trillion yen in 2009 as domestic sales decreased 2% to 4.1 trillion yen and exports tumbled 7% to 3.4 trillion yen.

Panasonic incurred expenses of 219.8 billion yen some of which were used in the company’s restructuring.

The company forecasts that it will book a 50 billion yen profit for the year ending March 2011, which will be the first profit in three years.

During the period, sales are expected to rise 19% to 8.8 trillion yen buoyed by contributions from the recently acquired Sanyo Electric Co.

The forecast is based on an exchange rate of 90 yen per dollar and 120 yen per euro.

Gainers & Losers

Mitsui Mining & Smelting led advancers in the Nikkei 225 index shares with a rise of 2.8% followed by increases in Itochu Corp. of 1.8%, in Jtekt of 1.6%, in Nippon Steel of 1.5%, and JFE Holdings of 1.1%.

CSK Holdings led decliners in the Nikkei 225 index shares with a fall of 7.2% followed by losses in Fanuc Ltd. of 6.8%, in Nippon Sheet Glass of 6.8%, in Sharp Corp. 6.4%, and Fast Retailing 6%.