Nikkei in Japan Trade in Bear Zone

Chandrasekhar Atreya
24 Aug, 2010
New York City

The benchmark index in Japan dropped and fell more 20% from its peak in April as the government struggles to revive aggregate demand and stem the rise of yen. Panasonic plans to expand China capacity flat screen TV capacity five-fold. Demand for new 20-year government bond firms up.

[R]5:00 PM Tokyo, Japan – The benchmark index in Japan dropped and fell more 20% from its peak in April as the government struggles to revive aggregate demand and stem the rise of yen. Panasonic plans to expand China capacity flat screen TV capacity five-fold. Demand for new 20-year government bond firms up.[/R]

Weakness in Japanese dragged the index below the 9000 mark into the bear market zone for the first time in 15 months led by exporters under pressure from global economic concerns and a stronger yen. Hedge funds and foreign investors were selling as government struggles to revive demand and stem the rise in the yen.

The Nikkei 225 Stock Average fell 1.33% or 121.55 to close at 8,995.14, falling more than 20% over its 18-month high on April 5. The broader Topix declined 0.9% to 817.73.

Of the stocks in the Nikkei, 185 traded down, 32 traded up and 8 were unchanged.

New 20-year Japanese government bonds had firm demand at an auction Tuesday, despite a low coupon, as more investors shifted their focus to long-term sectors as yields from short-term notes approached a bottom.

Ministry of Finance sold 1.0123 trillion yen of 20-year government bonds at a price of 100.7 yielding 1.553%, with a coupon of 1.6%, the lowest levels since June of 2003.

Investment in information and communications technology in Japan grew at the slowest pace among 10 high-tech countries, a study by the Internal Affairs Ministry shows.

Spending in this area grew 130% in Japan in the decade starting 1995, compared with growth topping 300% in the U.K. and the U.S. and over 500% in Denmark. The ministry blames weak spending on IT for the slow productivity gains seen in a number of fields, including retail and education.

Toyota Motor Corp issued more than $230 million in uridashi bonds, with Mitsubishi UFJ Securities as lead manager.

Japanese listed companies’ long-term debt swelled to 69% of their total liabilities as of June 2010, after they took advantage of sliding long-term rates to cut debt servicing costs.

JBCC Holdings Inc, which develops computer systems and provides maintenance services, aims to boost its annual sales in China to 10 billion yen by fiscal 2014 by expanding its presence in the country.

JBCC recently formed an operational tie-up with a local IT company that caters to Japanese businesses. The Shanghai unit expects to open a branch in Guangzhou by the end of this month, giving JBCC a presence in three Chinese cities.

Tokyo-based Mitsui Engineering and Shipbuilding Co won a 100 billion yen order from Petroleo Brasileiro SA to build a floating oil platform for use in the Guara oil fields off Rio de Janeiro.

Modec Inc, a subsidiary of Mitsui, will build the floating production, storage and offloading vessel by remodeling a used oil tanker and lease it for 20 years, said Masahiro Takaoka, a spokesman for Mitsui Engineering.

Sumitomo Trust & Banking Co and Chuo Mitsui Trust Holdings Inc said Tuesday they will hold a joint news conference at 4 p.m. in Tokyo about their merger plan. Sumitomo Trust President Hitoshi Tsunekage and Chuo Mitsui President Kazuo Tanabe will be present at the meet.

Chief Cabinet Secretary Yoshito Sengoku said Tuesday morning that the government will watch market movements closely, including checking whether speculators are affecting the market in any way.

“I think someone in an appropriate position will deliver appropriate messages at right times to market participants,” said Sengoku.

Panasonic Corp will expand the capacity of its plasma display panel plant in Shanghai by nearly five times by the fiscal year to March 2013, the Yomiuri Shimbun reported today.

Panasonic will achieve a 42-inch panel production capacity of more than 120,000 units a month, up from 25,000 now, the newspaper said.

Toshiba Corp said it is developing special televisions that can exhibit 3-D images without the viewer having to wear special glasses, Kaori Hiraki, a Tokyo-based spokesman said by phone today.

Construction machinery shipments from Japan for the current year ending March 31 may rise 41% to 1.51 trillion yen from a year earlier, according to a statement from the Japan Construction Equipment Manufacturers Association.

Gainers & Losers

Sumitomo Trust led the gainers in the index with a gain of 2.81% to 475 yen followed by Daiichi Sankyo 2.38% to 1,678 yen and Maruha Nichiro 2.19 % to 140 yen.

Furukawa Co Ltd led the decliners with a drop of 4.71% to 81 yen followed by Nikon Corp 4.02% to 1,409 yen and Ebara Corp 3.99% to 337 yen.