Nikkei in Japan Up 1.2%; April Trade Surplus

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

The stock indexes in Tokyo trading gained more that 1% as investors discounted media speculation on China

[R]5:00 PM Tokyo, Japan – Stocks in Japan closed higher after China rejected the media speculation of shift in stance for the euro-zone debt. Exports in April rose 40% and imports increased 24% and Japan recorded trade surplus of 742 billion yen in the month.[/R]

The stock indexes in Tokyo trading gained more that 1% as investors discounted media speculation on China’s shift away from the euro-zone debt. Japan recorded trade surplus of 742 billion yen in April.

Stocks in Japan and in Asia declined on a Financial Times report that People’s Bank of China may lower its sovereign debt holding in the euro-zone. The speculation unnerved the market but indexes recovered after the central bank of China issued a statement and rejected the speculation as “groundless.”

Shipping lines and retailers led the gainers.

The yen slipped against the euro for the first time in three days as signs of Asia Pacific economy gaining damped demand for safer assets.

The Nikkei 225 Stock Average increased 1.2% or 117.06 to 9,639.72, and the broader Topix Index gained 1.3% to 869.89.

In the first section of the Tokyo Stock Exchange 10.3 billion shares worth 699 billion yen were traded and in the second section 110 million shares valued at 1.5 billion yen changed hands.

Of the Nikkei 255 index stocks, 177 gained, 47 fell, and 1 was unchanged. Clarion Co. Ltd. led gainers in the index shares with a rise of 7% followed by Fukuoka Financial gaining 5.9%.

Exports Jump 40.4% to 5.9 trillion yen in April

Ministry of Finance reported today that exports from Japan climbed 40.4% to 5.9 trillion yen in April after rising 43.5% in the previous month, increasing for the fifth straight month.

Economists had earlier forecasted that shipments increase of 38.3%.

Imports also gained 24.2% to 5.1 trillion yen, rising for the fourth consecutive month, yielding a trade surplus of 742 billion yen.

Exports to China rose a record 41.4% to 1.15 trillion yen, while shipments to the U.S. advanced 34.5 % from 29.5% the previous month and sales to Europe increased 19.8% from 26.7% in March.

Japan’s net public debt, total debt minus the amount held by public financial institutions could climb to 280% of GDP, if bond yields rise and economic growth fails to recover to levels before the global financial crisis, said Koichi Ono, a senior strategist at Daiwa Securities Capital Markets Co.

If that happens, the nation’s efforts to contain public debt will be hampered by rising interest payments, Ono added.

Honda Motor Co, halted production at two of its plants in Guangzhou, Guangdong province on May 24 and two other factories in Guangzhou and Wuhan Hubei province on May 26, said Tomoko Uchida, a spokeswoman of the company confirmed today.

Production at these four factories were halted after workers at a parts factory in Foshan, Guangdong province went on strike on May 17 demanding a pay rise. The 1,850 workers at the parts plant are demanding monthly pay hike of 2,000 yuan to 2500 yuan, Honda’s Matsuura said.

Nissan Motor Co started building a factory to make lithium-ion batteries, next to its main North American auto assembly plant in Smyrna, Tennessee. The plant is expected to open in 2012 and supply battery packs for 200,000 electric cars per year, more than the 150,000 Leaf hatchbacks, Nissan plans to build in the facility annually.

Nissan will gain economies of scale to reduce costs when demand reaches the level predicted, the company’s CEO said.

Foreigners Lower Stock Holdings

Ministry of Finance reported today that foreign investors sold 434.7 billion yen stocks in the week of May 16 to May 22, net sellers for the third straight week.

Investors feared the fallout from the Greek debt crisis, including Germany''s ban on short selling of some financial products.

OECD Urges Japan’s Fiscal Reforms

The Organization of Economic Cooperation and Development said in its latest economic outlook for 2010 and 2011 that Japan must craft a credible fiscal reform plan and cut back on spending.

The central bank was also urged to keep interest rates at -0.1% and implement quantitative monetary policy measures to ward off deflation.

However, the economy is projected to remain on a recovery track through 2011.

Nikkei Movers

Chugai Pharmaceutical Co Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 2.0% followed by All Nippon Airways Co., Ltd 1.8%, Maruha Nichiro Holdings Inc 1.4%, Toyo Seikan Kaisha Ltd 1.4% and Shionogi & Co., Ltd 1.4%.

Clarion Co Ltd led gainers in the Nikkei 225 Stock Average with a rise of 7.0% followed by Fukuoka Financial Group, Inc 5.8%, Fujikura Ltd 5.8% and Isuzu Motors Ltd 5.6%.

Other Movers

Canon Inc added 2.0% to 3,680.00 yen.

Fanuc Ltd added 3.2% to 9,240.00 yen and Komatsu Ltd rose 3.0% to 1,666.00 yen.

Mitsui O.S.K. Lines, Ltd, the merchant fleet operator added 3.0% to 649.00 yen and other shipping lines gained between 1% and 3% after the freight rate index recovered and optimism for global trade rebounded.

Mitsui & Co Ltd advanced 4.1% to 1,303.00 yen after the trading company said Thursday that its U.S. unit has bought feed additive makers in Spain and Mexico in a bid to further strengthen its global marketing, according to a Dow Jones report.