Nikkei Rises 2% in 2-Day Rally; Mazda Recall

Chandrasekhar Atreya
19 Aug, 2010
New York City

Stocks in Japan surge 1.3% and gain in a tow-day to 2% after dropping to the lows last seen in November. The benchmark index is still hovering near the two-decade low. Mazda plans to recall more than half a million cars to fix power steering flaws.

[R]5:00 PM Tokyo, Japan – Stocks in Japan surge 1.3% and gain in a tow-day to 2% after dropping to the lows last seen in November. The benchmark index is still hovering near the two-decade low. Mazda plans to recall more than half a million cars to fix power steering flaws. The ruling party’s policy committee meets to discuss more stimulus plans.][/R]

Japanese benchmark index gained more than 1% after stocks dropped to a low seen in last November but the gain in the yen kept investors’ sentiment in check.

The Nikkei 225 Stock Average rallied 1.3% for the second day to close at 9,362.68. The broader Topix also gained 1.1% to close at 843.98 with more than two stocks gaining for each that fell.

Of the 225 stocks in the index 170 gained, 38 fell while 17 were unchanged.

The ruling Democratic Party of Japan’s Policy Research Committee is expected to make stimulus proposals next week aimed at taking the economy out of deflation, halting the yen’s appreciation and stopping the slide in stock prices.

Senior committee officials decided on the plan when they met in Tokyo today. The policy body will solicit ideas from various DPJ panels, with the final proposals to be compiled by August 26.

Global orders for Japanese semiconductor manufacturing equipment nearly doubled in the month of July from a year earlier, with the book-to-bill ratio for the month surpassing the key 1.00 threshold for the 14th month in a row, according to preliminary data released by an industry association Wednesday.

Orders in July grew 186% to 125.39 billion yen from 43.79 billion yen a year earlier, according to the Semiconductor Equipment Association of Japan.

Mazda Corp said it expects to recall more than half a million vehicles worldwide due to power steering flaws, in its largest recall ever.

The automaker already filed applications with local authorities by Tuesday to recall 215,000 vehicles in the U.S. and nearly 11,000 in China. It plans to broaden the recall to include export markets such as Europe and Australia.

Japanese investors bought foreign medium and long-term bonds to the tune of 2.17 trillion net in the week of August 8 to August 14, marking it the 14th week in a row of capital outflows from Japan, the Finance Ministry reported today.

The Japanese investors sold 3.09 trillion yen of such bonds and bought 5.27 trillion yen worth of bonds.

Mitsubishi Chemical Holdings Corp President Yoshimitsu Kobayashi said Wednesday the government is being lazy in its handling of the yen’s rise against the dollar.

“The government should intervene in foreign exchange markets to address the sharp fluctuation of currency rates,” Kobayashi said at a social gathering for reporters.

Iris Ohyama Inc will start construction of a factory in Suzhou, China, in September to produce plastic storage products and wooden interior furniture. Positioned as the company’s main plant for the Chinese market, the new plant will cater to the Shanghai district.

The first-phase will be a 12,000 square meter facility with construction to be started next month and with output slated to be commenced next July. The first phase of investment will be around 2.5 billion yen.

Itochu Corp said Wednesday it has acquired a stake in Chinese home-shopping network LuckyPai Ltd. The trading house along with Lotte Group of South Korea formed a special vehicle to buy as much as 63% of the stake from existing shareholders for an undisclosed sum. Lotte has taken a 50% plus stake while the balance has been acquired by Itochu.

Gainers & Losers

CSK Holdings led the gainers in the Nikkei with a rally of 6.83% to 297 yen followed by Tokyo Electronics 5.3% to 4,370 yen and NSK Ltd 4.09% to 535 yen.

Nippon Sheet Glass led the decliners with a fall of 3.56% to 217 yen followed by Sumitomo Osaka Ltd 3.12% to 155 yen and Konica Minolta 2.26% to 778 yen.