Stocks in Japan Decline for Seventh Day

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
01 Jul, 2010
New York City

The decline in stocks continued for a week in Japan and Asia as investors question the health of global economy. Slowing manufacturing in China was the latest addition to these worries. However, Bank of Japan

[R]5:00 PM Tokyo, Japan – The decline in stocks continued for a week in Japan and Asia as investors question the health of global economy. Slowing manufacturing in China was the latest addition to these worries. However, Bank of Japan’s quarterly survey indicated a positive outlook for corporate investment. Sumitomo agreed to acquire 30% stake in a Brazil based iron ore mining company.[/R]

Markets in Japan and Asia declined for the seventh day in a row as global economic rebound is increasingly questioned by investors. The latest worry stems from China after it reported slowing manufacturing. The ongoing worries related sovereign debt of peripheral nations in the euro-zone and weak jobs markets in the U.S. has unnerved investors.

The Topix index declined for the eighth consecutive day. The Nikkei index fell sixth continuous day.

The Nikkei 225 Index in Tokyo closed lower 191.04 or 2.04% to 9,191.60 and of the stocks in the index, 13 increased, 207 declined and 5 was unchanged. The broader Topix fell 1.6% to close at 828.39 with five stocks dropping for each that gained.

The quarterly Tankan survey was released by Bank of Japan in Tokyo today. The survey showed that large companies plan to increase capital spending by 4.4% in the year ending March 31 and they expect that profit will rise 21.6%. The Tankan labor index showed that big manufacturers expect employment to rise.

The Tankan index of sentiment climbed 15 points in June to plus 1, meaning optimists outnumbered pessimists. These reports were all in direct contrast to reports this week that showed unemployment increased and household spending dropped along with wages.

Sumitomo Corp, Japan’s third-largest trading co, will be paying $1.9 billion to acquire a 30% stake in a Usinas Siderurgicas de Minas Gerais SA unit in Brazil to meet growing demand for steel in China.

The company will buy a stake in Belo Horizonte, Brazil-based Mineracao Usiminas SA, and this will enable it to secure 3.1 million tons of iron ore a year from the current 1 million tons, said Sumitomo spokesman Koji Furui in a statement.

Peninsula Petroleum Ltd opened a new branch in Tokyo and has appointed Kazushi Fujisawa, to lead its effort to sell fuel oil in Japan and South Korea. Fujisawa had recently joined PetroChina Co in April to trade fuel oil.

“Our advantage is Peninsula’s global network because ship owners thirst global market information when they buy fuel oil. Our next target is the North American market,” said Fujisawa today.

Tokyo office is the 11th for Peninsula, which has branches in Geneva, Dubai, Athens and Montevideo.

Visitors from China rose 0.6% to 1 million last year, whereas tourists from South Korea dropped by 33% to 1.6 million and Taiwan 26% to just over a million. Visitors from China spend an average $1,300 per trip compared to $280 by Americans and $340 by South Koreans according to the Japan National Tourism Organization.

As the population in Japan declines, electronics stores across Japan, especially in places like Akihabara, are welcoming Chinese tourists with seven-foot billboards and Mandarin-speaking assistants.

Nikkei Movers

Taiheiyo Cement Corp led gainers in the Nikkei 225 Stock Average with a rise of 1.7% followed by Mitsubishi Chemical Holdings Corp 1.4%, Nippon Kayaku Co Ltd 1.4% and NEC Corp 1.3% and Bridgestone Corp 1.1%.

Oki Electric Industry Company, Limited led the decliners in the Nikkei 225 Stock Average with a loss of 6.4% followed by Clarion Co Ltd 5.8%, Yokogawa Electric Corporation 5.5%, Dowa Holdings Co Ltd 5.5% and Fuji Electric Holdings Co., Ltd 5.4%.

Other Movers

Hitachi Construction Machinery Co., Ltd fell 2.6% to 1,613.00 yen.

Honda Motor Co., Ltd fell 3.2% to 2,512.00 yen after the carmaker said sales of cars, trucks and buses, excluding minicars, rose by 21% to 293,537 vehicles in June from a year earlier, the Japan Automobile Dealers Association said in a statement in Tokyo today.

Nissan Motor Co., Ltd dropped 3.1% to 606.00 yen.

Sony Corporation dropped 3.6% to 2,296.00 yen.

Softbank Corp fell 4.3% to 2,267.00 yen after Yahoo Japan Corp. said Wednesday that tax authorities have ordered the Softbank Corp. unit to pay additional corporate taxes of about 26.5 billion yen.