Japan Revises GDP Growth to 5%

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
10 Jun, 2010
New York City

Indexes in Japan gained with the broader Topix index gaining for the first time in a week, after the first quarter GDP expansion estimate was lifted to 5% from the previous read of 4.9%.

[R]5:00 PM Tokyo, Japan – Japan lifted its first quarter GDP estimate to 5% from the previous read of 4.9%. GDP expanded for the fourth quarter in a row following the worst financial crisis in six decades. Machine tool orders nearly double in May from a year earlier. Japan amends law allowing companies to acquire overseas mining rights.[/R]

Indexes in Japan gained with the broader Topix index gaining for the first time in a week, after the first quarter GDP expansion estimate was lifted to 5% from the previous read of 4.9%.

The Nikkei 225 Index in Tokyo closed higher 103.52 or 1.10% to 9,542.65 and of the stocks in the index, 174 increased, 33 declined and 18 was unchanged. The broader Topix gained 0.8% to close at 856.79 in its first advance since June 4.

Japan’s first quarter GDP expanded more than initially estimated at an annualized 5% rate, faster than the 4.9% reported last month, the Cabinet Office said in Tokyo today.

Higher exports and upward revision to consumer spending led to the revision, pushing stock indexes up in the first session. The GDP expanded for the fourth straight quarter following the worst post-war recession in the country.

However a separate report showed that producer prices rose for the first time in 17 months in May, fueled by an increase in raw material prices.

Japanese machine tool orders nearly doubled and rose 191.8% in May from a year earlier, the Japan Machine Tool Builder’s Association, said in a report after the markets closed yesterday.

State-owned Japan Oil, Gas and Metals National Corporation expects to invest as much as 27.5 billion yen this fiscal year starting April, 1, in mining and mineral projects in Africa and Bolivia under a revised law allowing companies to acquire overseas mining rights from July 1.

This will aid the nation’s electronics and auto industries that consume large amounts of metals like platinum, lithium, indium, and chrome in mobile phones, computers, catalytic converters, liquid crystal displays and low-energy light bulbs.

Honda Motor Co said it will keep two car factories in China closed for the second day today because of a shortage of parts from Foshan Fengshu Autoparts Co. The workers at this parts factory had ended their strike last night after meeting with local government, union and company officials yesterday to discuss their demands.

The number of foreclosed properties and land sold at auctions in Tokyo supervised by the local District Court dropped 17% to 2,329 in the half year ended March 31 after the government introduced a loan repayment moratorium law, according to the Tokyo-based property appraiser Sanyu Appraisal Corp.

“Disposals of bad debt by financial institutions have slowed and the government’s measures to protect borrowers seem to have put a brake on the recent surge in auctions,” said Ryosuke Fukusako, a board member of Sanyu in Tokyo today.

Japanese pachinko game maker Universal Entertainment Corp, the biggest shareholder of Wynn Resorts Ltd, is planning a Hong Kong IPO within three years after opening the first phase of the Manila casino resort scheduled in 2012.

“We plan to list in Hong Kong and the funds will help finance expansion of the $2.7 billion Manila casino resort project,” said Chairman Kazuo Okada. The Manila project will be built on a 40-hectare site and may cost between $2.7 billion to $2.8 billion and construction is expected to begin this month, said Okada.

Nikkei Movers

Hino Motors Ltd led gainers in the Nikkei 225 Stock Average with a rise of 6.8% followed by Fanuc Ltd 6.2%, COMSYS Holdings Corporation 4.3% and Ube Industries, Ltd 4.0%.

Mitsui & Co Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 5.7% followed by Sumitomo Osaka Cement Co., Ltd 2.3%, CSK Holdings Corporation 2.2%, Meidensha Corp 1.8% and Yokogawa Electric Corporation 1.7%.

Other Movers

Honda Motor Co., Ltd rose 0.08% to 2,623.00 yen.

Mitsui & Co Ltd fell 5.7% to 1,099.00 yen on the worries that its stake of 10% in the leaking oil well in the Gulf of Mexico controlled and operated by BP Plc may create multi-billion dollar liabilities.

Nitori Co., Ltd, the furniture retailer, added 4.4% to 7,800.00 yen.

Secom Co Ltd, the security company, rose 1.0% to 3,975.00 yen.

Sony Corporation fell 1.6% to 2,524.00 yen after the maker of electronic goods said Quantum Kapital AG and Blaupunkt GmbH have agreed to acquire the Ribeauville plant in France from the company.