Emergency Meeting at BoJ; Nikkei Surges

Chandrasekhar Atreya
30 Aug, 2010
New York City

Stocks in Japan rallied after Bank of Japan in an emergency meeting decided to expand its funding and offer 10 trillion yen in short term loans. The move came under pressure from the government to stem the recent gains in the yen. Domestic passenger car output in July gained 15%.

[R]5:00 PM Tokyo, Japan – Stocks in Japan rallied after Bank of Japan in an emergency meeting decided to expand its funding and offer 10 trillion yen in short term loans. The move came under pressure from the government to stem the recent gains in the yen. Domestic passenger car output in July gained 15%.[/R]

A sharp rally in Tokyo trading lifted the benchmark index as much as 3.2% higher after the yen slipped following the central bank’s emergency meeting. After an intra-day record of over 9,200 the index pared some of its earlier gains.

The Nikkei 225 Stock Average gained 1.76% or 158.2 to close at 9,149.26. The broader Topix also gained 1.2% to 829.21 with as many as nine shares rising for everyone that fell.

Of the 225 stocks in the Index as many as 209 gained while 7 declined and 9 remained unchanged.

The Bank of Japan called for an emergency policy meeting on Monday under strong governmental pressure, and decided to expand its funding program introduced in December to safeguard the fragile economy.

The Bank of Japan decided Monday to supply 10 trillion yen via six-month loans at a policy rate of 0.1%, in addition to the existing three-month loan program it has been offering in open-market operations.

“By keeping the key interest rate unchanged the bank will encourage a decline in market interest rates and further enhance monetary conditions. The bank believes that the monetary easing measure, together with government efforts, will be effective in further ensuring the nation’s economic recovery,” the bank said in a statement.

Japan’s domestic passenger car production grew by 15% over last year to 826,000 vehicles in July, according to preliminary data released Friday by eight major automakers. Output was buoyed by government tax incentives and subsidies for purchases of environmentally friendly cars and by a 21% increase in exports. Overseas production climbed 19% to 1.032 million cars, with both figures topping those at home.

With the government’s subsidy program ending in September, automakers will probably curb production from October to keep pace with demand.

Chinese Primer Minister Wen Jiabao said Sunday that Japanese firms operating in China must increase wages for local workers in the wake of a series of strikes, the Japanese Foreign Ministry said.

Japan and China agreed Saturday to launch a vice minister-level meeting to study Tokyo’s call for Beijing to ease controls over export of rare earth metals used in hybrid electric vehicles, mobile phones, and other high-tech products.

In a fresh setback for the beleaguered 787 Dreamliner program, Boeing Co said Friday a new delay could push first delivery of the plane into the middle of the first quarter of 2011.

The latest snafu involves British engine supplier Rolls-Royce Group Plc, which is one of the two firms selected by Boeing to provide engines for the new Dreamliner wide-body jet made of carbon-fiber composite.

“The latest delay follows an assessment of the availability on an engine needed for the final phases of flight tests this fall,” said Boeing early Friday.

Citibank Japan Ltd took the top spot in the ranking for retail banks in a survey compiled by Nikkei Inc and Nikkei Research Inc.

The survey targeted 118 banks nationwide, evaluating them based on counter services, including teller’s attitude and ability to explain and consult with customers on financial services, as well as product lineups such as investment trusts and individual annuities.

Mitsui Fudosan Co, Japan’s largest developer, plans to open more shopping malls in China as consumer spending will spur demand even as that nation tries to cool the property bubble.

Mitsui Fudosan plans to build several shopping centers in cities including Beijing from 2014, after completing its first mall in Shanghai by 2013, Takehito Fukui, a general manager of the company’s retail property division said.

Gainers & Losers

Trend Micro led the gainers in the Nikkei with a rally of 5.8% to 2,354 yen followed by Nippon Suisan 5.43% to 272 yen and Nitto Boseki Ltd 4.94% to 170 yen.

JX HD led the decliners in the index with a fall of 2.22% to 440 yen followed by Mizuho Financial 1.49% to 132 yen and Maruha Nichiro 0.72% to 138 yen.