Nikkei in Japan Nears Bear Market Phase

Chandrasekhar Atreya
12 Aug, 2010
New York City

Stocks in Japan dropped pushing the benchmark index down 20% in the year, signifying a bear market phase. Orders for steel products rose 6% in June. Total outstanding commercial paper debt reaches the 10 trillion yen.

[R]5:00 PM Tokyo, Japan – Stocks in Japan dropped pushing the benchmark index down 20% in the year, signifying a bear market phase. Orders for steel products rose 6% in June. Total outstanding commercial paper debt reaches the 10 trillion yen.][/R]

Investor sentiment soured further with the continued rise in the yen and fresh worries of the U.S. economic slowdown. The yen reached a 15-year high and indexes for the year in intra-day trading dropped to 20% for the year.

Nikkei 225 Stock Average dropped below the lows of July 1 but managed to recover from the 2.4% fall of the day and closed down 0.56%.

The Nikkei 225 Stock Average dropped 0.86% to close at 9,212.59 paring a drop of as much as 2.4% during the day. The decline of nearly 20% in Nikkei index suggests that stocks are in a bear market phase.

The broader Topix Index lost 0.8% to 827.78. In the Nikkei 225 stocks 37 had gains, 176 declined and 12 remained unchanged.

Foreigners were net buyers of Japanese stocks for the second consecutive week, between August 1 and 7, with the purchase of 150.1 billion yen, the Finance Ministry reported Thursday.

Orders for steel products rose 6% in the year to 5.67 million tons in June, making it ninth straight month of increase, the Japan Iron & Steel Federation said Wednesday. The pace of growth slowed to single digits for the first time in eight months on a sharp drop in exports.

Domestic demand for steel material jumped around 120% to 136,000 tons for industrial equipment, reflecting brisk exports of construction machinery to China and other markets. Demand for steel material for automotive applications climbed 29% to 794,000 tons.

The yen continued its climb against the dollar Wednesday, breaking through its new peak set earlier in the day to breach the 15-year high. The dollar dipped as low as ¥84.72 shortly after 1100 GMT, according to trading system EBS. It last traded at those levels in July 1995.

LaSalle Investment Management Inc said Wednesday it has acquired an outlet mall in the Tochigi Prefecture city of Nasu. The U.S. real estate investment firm purchased Nasu Garden Outlet from Daiwa Land Group Inc for an undisclosed amount.

Sales of used vehicles fell for an 18th consecutive month in July, slipping 4.8% year-on-year to 327,881 units, the Japan Automobile Dealers Association reported Wednesday. Sales of used passenger cars slid 3.9% to 282,510 vehicles, falling for a 22nd month in a row. Used truck sales decreased for a 15th straight month, sinking 9.6% to 36,576 units.

Towa Corp, a manufacturer of molds used in semiconductor production, on Wednesday scrapped plans to build a factory in Tosu, Saga Prefecture. The project would have increased output capacity for ultra precision molds, was on hold due to slumping chip market. Towa decided to raise production efficiency at existing operations.

Outstanding commercial paper exceeded 10 trillion yen for the first time in five months at the end of July as demand for short-term funds rose. Commercial paper issuance tends to increase in bonus seasons as companies secure cash for the payouts.

The figure climbed to 10.25 trillion yen, up 8.6% from the end of June, and continues to climb according to the Japan Securities Depository Center.

Gainers & Losers

Meiji HD led the gainers in the Nikkei 225 Index with a gain of 2.56% to 3,800 yen followed by Yokogawa Electric 2.14% to 524 yen and Kyocera Corp 1.46% to 7,660 yen.

Citizen Holdings led the decliners in the index with a fall of 6.52% to 459 yen followed by Meidensha Corp 4.4% to 261 yen and Trend Micro Ink 3.91% to 2,261 yen.