Toyota Swings to Profit; Nikkei Slips

Chandrasekhar Atreya
04 Aug, 2010
New York City

Stocks in Japan dropped after exporters fell as the yen surged to a 7-month high against the dollar. Toyota Motor posts better-than-expected first quarter result. Panasonic plans to cut as much as 50% TV prices in China to qualify for subsidies.

[R]5:00 PM Tokyo, Japan – Stocks in Japan dropped after exporters fell as the yen surged to a 7-month high against the dollar. Toyota Motor posts better-than-expected first quarter result. Panasonic plans to cut as much as 50% TV prices in China to qualify for subsidies.[/R]

Japanese stocks traded lower with exporters sliding after the yen rose to a 7-month high against the greenback amid talk of further policy easing by the U.S. Federal Reserve.

The Nikkei 225 Stock Average lost 2.11% or 204.67 to close at 9,489.34. The broader Topix also lost 1.5% to close at 845.93 with more than 10 shares falling for every one that gained.

In the index only 21 stocks gained while 196 lost with 8 were unchanged.

Among the exporters, Canon Inc, the camera maker that gets 80% of sales from overseas market, lost 4.3% to 3,650 yen. Sony Corp lost 3% to 2,647 yen. Toyota Corp lost 1.6% to 3,090 yen and Nissan Motor lost 4.3% to 648 yen.

Japan’s monetary base grew 6.1% year-on-year to 98.84 trillion yen in July, its fastest growth since August 2009, the Bank of Japan said Tuesday.

The yen strengthened for a second day against the dollar and the euro after reports yesterday showed consumer spending, home sales and factory orders in the U.S. were all weaker than expectations. Today’s increase has pushed the Japanese currency to an eight-month high against the dollar. The yen appreciated as much as 85.33 against the dollar in Tokyo today, its strongest level since November 27.

Toyota Motor Corp posted a net profit of 190.4 billion yen in its fiscal first quarter, from a loss of 194.8 billion yen in the same period a year ago, as sales in emerging markets and aggressive cost cutting offset a rise in the yen and recalls in North America and Europe.

The largest automaker lifted its annual outlook for the year ending in March 2011 and estimated net income of 340 billion yen compared to previous estimate of 310 billion yen.

In the quarter, the automaker sold 1.82 million vehicles, an increase of 419,000 units compared to the quarter a year ago and sales increased 27% to 4.87 trillion yen.

Osaka-based Panasonic Corp, the world’s biggest maker of plasma televisions, plans to cut TV prices by as much as 50% in China in order to qualify for government subsidies and spur sales in that nation.

“We’ll probably need to cut 10% or 20% of our prices, depending on the mode. For lower end models, we may have to cut the price by 50%,” said Hitoshi Otsuki, the senior Managing Director of overseas operations in an interview yesterday.

Japan may import less of corn if it begins selling the surplus rice from stockpiles meant for local population to local feed makers. Japan self-sufficient in rice, is saddled with surplus as domestic consumption is declining with an ageing population.

The Ministry of Agriculture Forestry and Fisheries may supply rice as an alternative to imported feed grains such as corn from burgeoning stockpiles of rice which stood at 980,000 tons as on June 30, said Masachika Murai, Director at the ministry’s rice policy division in an interview in Tokyo on Tuesday.

Mizuho Securities Co Ltd entered into a limited liability partnership agreement with Tata Capital Pte Ltd of Singapore, a wholly-owned subsidiary of Tata Capital on Tuesday to develop a growth capital private equity business in India and investing through private transactions in Indian companies requiring growth capital.

It is estimated that over $35 billion of equity capital would be required annually to enable Indian mid-market companies to achieve their growth potential and Tata Capital Growth Fund aspires to provide a part of this risk capital.

Speaking on the occasion in Mumbai, Praveen P. Kadle, Managing Director and CEO of Tata Capital said, “The total savings base of Japan offers a stable source of capital. However, at present only a small fraction of this base, flows into India.”

Gainers & Losers

Dowa Holdings Co led the gainers in the Nikkei with a gain of 2.95% to 489 yen followed by Mizuho Financial 2.82% to 146 yen and UBE Industries 1.92% to 212 yen.

NTT Data Corp led the losers with a decline of 5.81% to 300,000 yen followed by Okuma Corp 5.27% to 467 yen and NTN Corp 5.08% to 374 yen.