Political Worries Hover in Japan

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
01 Jun, 2010
New York City

Stock indexes in Japan fell due to political uncertainty in the country. The futures market at the Nikkei 225 faces chaos as Deutsche Bank sends erroneous sell order. Strike at China plants of Honda continues. Hitachi prepares to globalize its water treatment business.

[R]5:00 PM Tokyo, Japan – Stock indexes in Japan fell due to political uncertainty in the country. The futures market at the Nikkei 225 faces chaos as Deutsche Bank sends erroneous sell order. Strike at China plants of Honda continues. Hitachi prepares to globalize its water treatment business.[/R]

Stocks in Japan declined dragging the Nikkei 225 Stock Average lower amid concerns of political turmoil in Japan and a weakening euro. The broader Topix also declined with nine stocks falling for every seven that gained.

The Nikkei 225 Index in Tokyo closed lower 56.87 or 0.58% to 9,711.83 and of the stocks in Nikkei 225 Stock Average, 76 increased, 131 declined and 18 was unchanged.

The decline in the index was led by exporters as the yen strengthened against both the euro and the dollar at the end of yesterday’s trading in Tokyo.

The Nikkei 225 Stock Average plunged briefly, immediately after the market opened at 9:00 a.m. today after sell orders for the Nikkei 225 Stock Average Futures were received erroneously from Deutsche Bank AG.

The sell orders were sent erroneously because of a malfunction in the system, said Aston Bridgman, Deputy Head of Communications of Deutsche Bank AG in Japan.

The auction of 10-year bonds today drew bids worth 3.85 times the amount on offer, the most since May 2007. This was seen as a result of stocks falling in trading today. Bonds also gained as the European Central Bank warned yesterday of more bank losses in the region as fiscal crisis widens, boosting demand for the relative safety of Japan’s debt.

Honda Motor Co kept production halted at its units in China and will likely keep it closed until tomorrow after some striking employees rejected a pay increase proposal.

Fewer than 100 of the total parts plant’s workforce of 1,900 rejected Honda’s offer of 24% pay increase to 1,900 yuan a month, said Takayuki Fujii, a Beijing-based spokesman of Honda.

Scuffles broke out between workers and staff from the government-backed trade union at the components factory yesterday, according to the South China Morning Post. However a line at the parts plant making manual transmissions reopened yesterday, Honda said.

Sales of cars during the Memorial Day weekend in the past three years have run about 40% higher than a typical May weekend and sales on the last day of the month this year were more than double the daily average, according to researcher Edmunds.com.

Ford Motor Co, Honda Motor Co, and Nissan Motor Co, kept the discount on for the longest period in 10 years to attract buyers over the Memorial Day holiday weekend.

May had 26 selling days, the same number as a year earlier.

Nikkei Movers

Maruha Nichiro Holdings Inc led gainers in the Nikkei 225 Stock Average with a rise of 4.3% followed by The Tokyo Electric Power Company, Incorporated 4.2%, Unitika Ltd 3.8% and NKSJ Holdings, Inc 3.1%.

Fujikura Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 4.0% followed by OKUMA Corporation 3.5%, Chiyoda Corp 3.5%, Hitachi, Ltd 3.4% and Meidensha Corp 3.3%.

Other Movers

Hitachi, Ltd dropped 3.4% to 359.00 yen after the company said it will step up its efforts to globalize its water treatment-related businesses. Effective June 1, Hitachi will establish in its headquarters the water environment solution business management division, which will report directly to the company president.

Honda Motor Co., Ltd fell 0.2% to 2,764.00 yen after the company had a short interest ratio of 0.6 based on average daily volume of 804,000 shares and 499,000 shares short.

Sony Corporation fell 0.9% to 2,788.00 yen after the electronics maker said it will offer 3-D game titles for its PlayStation 3 console from June 10.

Toyota Motor Corporation fell 0.4% to 3,265.00 yen after the company will ramp up its development of eco friendly cars and ensure annual domestic production stays above 3 million vehicles.

The Tokyo Electric Power Company, Incorporated gained 4.2% to 2,353.00 yen after the company stock was upgraded to “buy” from “neutral” at Goldman Sachs.

Tsuruha Holdings Inc dropped 1.3% to 3,025.00 yen.