Nikkei Drops; Rising Yen Affects Exports

Chandrasekhar Atreya
27 Jul, 2010
New York City

Stocks in Japan closed marginally lower and banks gained and yen traded at elevated level. Yahoo Japan and Google are in talks to partner for Internet search and ad business. Japan gives a $149 million loan to Kenya to build rice farms.

[R]5:00 PM Tokyo, Japan – Stocks in Japan closed marginally lower and banks gained and yen traded at elevated level. Yahoo Japan and Google are in talks to partner for Internet search and ad business. Japan gives a $149 million loan to Kenya to build rice farms.[/R]

Japanese stocks opened higher for the third day led by banks after the Basel Committee on Banking Supervision relaxed some of the proposed rules concerning new core capital requirements. The benchmark index lost later in the day and closed marginally lower.

The Nikkei 225 Stock Average lost 0.07% or 6.81 to close at 9,496.85.

Japanese companies are increasingly bullish in their outlooks for the current fiscal year with roughly 80% of the revised estimates so far pointing to improved pretax earnings.

The rising popularity of yen as an a safe asset is limiting the profits of several Japanese exporters like Toyota Motor Corp, Panasonic Corp and others who are scheduled to report earnings over the next fortnight even though exports have risen for the past seven months.

In contrast South Korean competitors like Samsung Electronic Co, and Hyundai Motor Co have been winners after won fell as much as 8.5% against the yen this year.

Kirin Holdings Co agreed to pay S$1.34 billion for Temasek Holdings Pte’s 14.7% stake in Fraser & Neave Ltd as the Japanese brewer seeks to grow outside Japan.

Kirin will buy 205.5 million shares from Singapore’s state-invested company for S$6.50 per share, the Tokyo-based brewer said in a statement on its Web site. The offer is 14.6% higher than Monday’s closing price for the Singapore-based property dealer.

Yahoo Japan and Google Inc are in talks to collaborate on the Internet search and advertising business.

Yahoo Japan, Japan’s largest internet portal site, appears set to adopt Google’s search engine instead of teaming up with Microsoft. Yahoo Japan which currently uses Yahoo Inc’s search technology and Google together would control the bulk of Japan’s search market.

Japan will give Kenya a loan of $149 million to build an irrigation system to boost the country’s rice production to reduce its reliance on imports, Kenyan government officials said.

“The loan for expanding the Mwea Irrigation System, 100 kilometers southeast of Nairobi will help Kenya meet its target of irrigating 30,000 hectares of farmland annually,” said David Stower, Permanent Secretary in the Ministry of Water and Irrigation, told reporters today.

Gainers & Losers

Nitto Boseki Co led the gainers in the Nikkei with a gain of 5.29% to 199 yen followed by Shinsei Bank Ltd 3.12% to 66 yen and Oki Electric Industries 2.99% to 69 yen.

JFE Holdings Inc led the decliners with a loss of 3.14% to 2,656 yen followed by Kobe Steel Ltd 2.69% to 181 yen and Clarion Co Ltd 2.25% to 174 yen.