Japan Stocks Decline; Mizuho Net Surges

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

Nikkei Stock Average declined 1.5% today and dropped 0.9% in the week. Shinsei, Aozora Bank merger proposal scrapped. Mizuho Financial Group profit soars to 239.4 billion yen. Sumitomo Mitsui Financial Group annual profit climbs to 271.5 billion yen in 2009.

[R]5:00 AM New York, 7:00 PM Tokyo – Nikkei Stock Average declined 1.5% today and dropped 0.9% in the week. Shinsei, Aozora Bank merger proposal scrapped. Mizuho Financial Group profit soars to 239.4 billion yen. Sumitomo Mitsui Financial Group annual profit climbs to 271.5 billion yen in 2009.[/R]

Japanese stocks slipped the most this week after Sony Corp forecast much lower profit than market consensus.

Sony Corp forecast net income of 50 million yen in the year ending March 2011, 50% lower average analysts estimate prepared by Bloomberg, even as Barclays Capital and Goldman Sachs cut their share price estimates on Sony.

The euro and the dollar weakened against the yen and commodity prices declined.

The yen rose to 92.52 against the dollar from 93.32 yesterday and climbed to 115.88 against the euro from 118.25 yesterday.

Shinsei Bank Ltd President Masamoto Yashiro said in a statement that the bank is scrapping the merger deal with Aozora Bank Ltd, and it plans to raise as much as 100 billion yen in capital.

The merger is being scrapped by both banks after a recovery in credit markets makes it easier for them to raise funds. Both banks forecast profits for the current fiscal year after posting a combined loss of more than $4.2 billion in the 12 months ending March 2009. Both shares declined in the bourses today.

Properst Co, the Japanese realtor promoting high-rise apartments in central Tokyo, filed for bankruptcy protection as the condominium sales have dropped to two-decade lows in the city.

While the liabilities totaled 55.4 billion yen, the company will maintain its stock listing with Jasdaq market as it undergoes the bankruptcy process in part through capital raising via private placement and debt equity swaps, the company said.

The Tokyo-based investment firm Bayview Asset Management Co, will hire Alphex Investments Co President Ichiro Takamatsu in July after folding in some of the 1 Billion yen fund he manages.

Alphex will be halting operations in June as Takamatsu had difficulties managing both the operation and client’s funds simultaneously, Bayview CEO Ken Yagi said in an interview yesterday.

In Tokyo trading Nikkei 225 Stock Average fell 1.5% or 158.04 to 10,462.51, but rose 0.9% for the week, while the broader Topix Index decreased 1.2% to 936.45, rising 0.5% in the week.

Of the Nikkei 225 index stocks, 40 rose, 181 fell, and 4 were unchanged. Alps Electric Co. led gainers in the index shares with a rise of 11.8%.

Mizuho Financial Group Profit Rises to 239.4 billion

Mizuho Financial Group reported today that its profit for the year ended March 31 rose to 239.4 billion yen from a loss of 588.8 billion yen in the same period a year ago on fewer bankruptcies and dropping of provisions.

The lender intends to declare a final dividend of 8 yen per share from 10 yen per share a year earlier.

Fourth quarter net income advanced to 113.1 billion yen compared to a loss of 538.3 billion yen.

Soaring loans fell to 2.9 billion yen from 300 billion yen in the comparable year-ago period.

Mizuho projects that its group profit will rise 80% to 430 billion yen in the year through March 2011.

SMFG Profit Jumps

Sumitomo Mitsui Financial Group reported today that its annual group net profit rose to 271.56 billion yen from a loss of 373.46 billion yen a year ago.

However, group operating revenue declined 11% to 3.2 trillion yen from 3.6 trillion yen.

The bank is seeking to change a part of its corporate code to allow a hike in the limit on the number of shares the bank can issue to 3.0 billion from the current 1.5 billion at a shareholder meeting in June 30.

SMFG forecasts that group net profit will rise to 340 billion yen in the year through March 2011 on revenue of 3.4 trillion yen.

Sony Corp Loss Eases to 40.8 Billion

Sony Corp. reported yesterday that loss in the full year ended March eased to 40.8 billion yen from a loss of 98.9 billion yen as revenues slipped 7% to 7.2 trillion yen from 7.7 trillion yen a year earlier.

Operating income advanced to 31.8 billion yen from a loss of 227 million in the same period a year ago as the business began to reap the rewards of cost-cutting measures and a restructure.

Sony expects that its profit for the year ended March 31, 2011 will rise to 50 billion yen from a loss of 40.8 billion yen this year as sales and operating revenue are estimated to climb 5% to 7.6 billion yen.

Operating income is also forecasted to grow to 140 billion yen.

Nikkei 225 Stock Average Movers

Alps Electric Co. led gainers in the Nikkei 225 index stocks with a rise of 11.8% followed by Pioneer Corp. 9%, Unitika 9%, Nippon Suisan 5.5%, and CSK Holdings 5.3%.

Sony Corp. led decliners in the Nikkei 225 index stocks with a fall of 6.8% followed by Isuzu Motor Corp. 5.2%, Nippon Light Metals 4.9%, Nippon Chemical Industries 4.6%, and Taiyo Yuden Co. 4.5%.

Other Movers

Inpex Holdings dropped 2.5% to 629,000 yen after crude oil prices fell 1.1% to $73.62 per barrel.

Sumitomo Mitsui Financial Group plunged 0.1% to 2,875 yen despite announcing that its annual group net profit rose to 271.56 billion yen from a loss of 373.46 billion yen a year ago.

Shinsei Bank Ltd. declined 4.5% to 106 yen and Aozora Bank Ltd. shed 5% to 114 yen.

NTT DoCoMo fell 0.6% to 139,000 yen after it reported that net profit tumbled 9% to 492.2 yen for the year ended March.