Stocks in Japan Rise; Yuan Peg Ends

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

Stocks in Japan end at one-month high after China permitted the float of the yuan. Honda Motor Co and Toyota Motor Corp hiked wages to end strikes in parts factories in China. Premier Naoto Kan is scheduled to unveil his plan to bring down the debt.

[R]5:00 PM Tokyo, Japan – Stocks in Japan end at one-month high after China permitted the float of the yuan. Honda Motor Co and Toyota Motor Corp hiked wages to end strikes in parts factories in China. Premier Naoto Kan is scheduled to unveil his plan to bring down the debt.][/R]

Stocks in Japan gained following two days of decline after China signaled an end to its 23-month old yuan’s peg to the dollar boosting hope of exports from Japan.

The Nikkei 225 Stock Average rose as much 2.43% or 242.99 to close at 10,238.01. Of the stocks in the index, 213 increased, 8 declined and 4 were unchanged.

Toyota Motor Corp and Honda Motor Co decided to hike worker’s wages in their parts factories in China to prevent future lockouts.

Workers at Honda Lock (Guangdong) Co agreed to the wage hike offer on June 18 and ended the strike. The fourth Honda affiliate to be hit by a walkout in the region, Nihon Plast Co, agreed to hike wages on June 19, as per Matsuo Suzuki, a spokesman for the company in Japan.

More than 20 provinces and cities in China have raised their minimum wages this year, the Shenzhen city government said on its Web site.

Japan’s 10-year bonds fell today after two days of rally tempered by concern that Japanese Prime Minister Naoto Kan will lead efforts to rein in the world’s largest public debt. Bonds maintained their losses after a report by the Trade Ministry in Tokyo showed that the nation’s all industry index rose 1.8% in April after dropping a revised 0.7% in March.

Japanese Prime Minister is scheduled to unveil his fiscal plan this week for containing the nation’s burgeoning debts. The upper house elections are scheduled on July 11.

In an election strategy released last week, the ruling party in Japan said it will commit to erase the primary deficit in 10-years while at the same time capping bond sales at this year to 44.3 trillion yen.

Nikkei Movers

Hitachi Construction Machinery Co., Ltd led gainers in the Nikkei 225 Stock Average with a rise of 6.7% followed by Mitsubishi Corporation 6.6%, Toyota Tsusho Corporation 6.6% and Okuma Corporation 6.2% and Mitsui & Co Ltd 5.8%.

Sumco Corp led the decliners in the Nikkei 225 Stock Average with a loss of 3.1% followed by Fujitsu Ltd 1.6%, The Tokyo Electric Power Company, Incorporated 0.8%, Taiheiyo Cement Corp 0.7% and Japan Tobacco Inc 0.5%.

Other Movers

Fanuc Ltd rose 5.4% to 11,370.00 yen and Hitachi Construction Machinery Co., Ltd gained 6.7% to 1,873.00 yen.

Honda Motor Co., Ltd added 3.7% to 2,790.00 yen after the suppliers sacrificed earnings in China by raising wages to end strikes.

Komatsu Ltd, the maker of excavators, rose 4.6% to 1,782.00 yen and Mitsubishi Corporation increased 6.6% to 2,033.00 yen on the hopes that the Yuan revaluation may increase exports.