Largest Weekly Drop in Tokyo Stocks

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

Stocks in Japan declined the most in the week in a year. On Friday, Nikkei dropped as much as 3.9% before closing down 2.5% after falling nearly to its lowest in the year. Bank of Japan offers one-year loans to counter deflation. Toyota Motors agreed to acquire $50 million stake in Tesla motors.

[R]6:00 PM Tokyo, Japan – Stocks in Japan declined the most in the week in a year. On Friday, Nikkei dropped as much as 3.9% before closing down 2.5% and falling nearly to its lowest in the year. Bank of Japan offers one-year loans to counter deflation. Toyota Motors agreed to acquire $50 million stake in Tesla Motors.[/R]

Stocks fell in Japan pushing key indexes on course for their biggest weekly drop in more than a year after rising unemployment in the US and deepening debt crisis in Europe spurred concerns that global economy will stall and derail.

Bank of Japan said it will offer one-year loans to other banks to encourage lending to counter deflation. The loans will be offered at the same rate as the benchmark overnight rate, the central bank said in a statement. The announcement came after the stock market tumbled.

For the loans to be eligible, the commercial lenders will have to submit plans explaining how the projects being funded by them can bolster economic growth. The size of each loan will be determined based on these proposals, the central bank said.

Tesla Motors Inc, the Palo Alto, California-based electric carmaker will buy a Toyota joint venture factory in California to build its Model S and other cars, Tesla CEO Elon Musk said yesterday. Toyota Motor will acquire a $50 million stake in Tesla Motors Inc.

Toyota said its stake value in Tesla hasn’t been fixed before Tesla share sale.

In order to build a global platform, Mitsubishi Estate Co, will set up a real estate fund in the US this year and seek acquisitions overseas to counter declining demand at home. Office vacancies in Tokyo are at a record high and commercial land prices declined to the lowest level in 36 years.

“As demand in Japan will probably remain weak, we would not like to sit back and be satisfied with what we have built over years at home,” said CEO Keiji Kimura in an interview in Tokyo on May 19.

As demand for ATM equipments pick up after the recent financial crisis, Glory Ltd, the Japanese maker of automated-teller machines, plans to double capacity at its factories in China and the Philippines within a year.

Glory will spend about 1 billion yen to expand capacity at its Cavite site outside Manila and in Suzhou, near Shanghai, President Hideto Nishino said in an interview yesterday. The investments will almost double the output of cash dispensers and other vending machines at the factories, he said.

The new listings on the Tokyo Stock Exchange will be around 50 this year, half the number projected this year, as companies are canceling plans to raise capital as deficit concerns in Europe affect global markets, said, Atsushi Saito President of the bourse. He said this while speaking in a Bloomberg television interview on May 19.

The Nikkei 225 Index in Tokyo closed lower 245.77 or 2.45% to 9,784.54 and of the stocks in Nikkei 225 Stock Average, 9 increased, 211 declined and 5 was unchanged.

Nikkei Movers

NKSJ Holdings, Inc led the decliners in the Nikkei 225 Stock Average with a loss of 5.0% followed by COMSYS Holdings Corporation 4.9%, Pioneer Corporation 4.4%, MS&AD Insurance Group Holdings, Inc 4.3% and Takara Holdings Inc 4.1%.

Panasonic Corporation led gainers in the Nikkei 225 Stock Average with a rise of 2.5% followed by Sony Corporation 2.3%, Hitachi Construction Machinery Co., Ltd 1.7% and Alps Electric Co Ltd 1.6%.

Other Movers

Canon Inc, the maker of digital cameras, dropped 2.6% to 3,725.00 yen.

Nissan Motor Co Ltd fell 3.4% to 674.00 yen after the carmaker started sales of its in-house developed quick chargers through its regional parts sales affiliates.

Nippon Electric Glass Co., Ltd fell 3.8% to 1,170.00 yen after the glass producer was downgraded to “market weight” from “overweight” at Credit Suisse.

NKSJ Holdings, Inc decreased 5.0% to 569.00 yen after the company said Thursday it profited in the last fiscal year ended March in part due to smaller losses from securities investments.