Weekly Rise in Japan in Five Weeks

Chandrasekhar Atreya
03 Sep, 2010
New York City

Stocks in Japan rallied for a third day this week and close up in a week in more than a month. Capital expenditure in the quarter to June declined. August monetary base rises in Japan. U.S. auto sales of Toyota dropped 34% and Honda plunged 33%.

[R]5:00 PM Tokyo, Japan – Stocks in Japan rallied for a third day this week and close up in a week in more than a month. Capital expenditure in the quarter to June declined. August monetary base rises in Japan. U.S. auto sales of Toyota dropped 34% and Honda plunged 33%.[/R]

Japanese stocks climbed for a third day, driving benchmark indexes to their first weekly gain in a month, after reports showed an increase in pending home sales and same store sales in U.S.

The Nikkei 225 Stock Average gained 0.57% or 51.29 to close at 9,114.13. The broader Topix also climbed 0.5%to 823.7 with more than two shares rising for each declining.

The Nikkei gained 1.4% in the week and the Topix gained 0.5%. In the index, 158 gained, 53 lost and 14 were unchanged.

Capital investment by Japanese firms decreased by 1.7% from year-ago levels during the quarter ended June, a survey released Friday by the Ministry of Finance showed. The corporate profits rose 83.4% during the period compared with a year earlier. Corporate sales climbed 20.3%, the ministry said.

The capital spending is closely watched because the government uses this data while revising its preliminary gross domestic product estimate, which showed a 0.4% annualized increase in the second quarter.

Only 44% of the people aged 15 to 34 subsist on their own earnings, the Labor Ministry said Thursday in a report that reflects young people’s struggle with low wages. Of those 15 to 34 with full-time jobs, 51.6% live on their own income, but only 30.3% engaged in other types of jobs are self-reliant.

The benchmark 10-year government bond yield rose briefly by 0.025 percentage points from Thursday to a seven-week high of 1.13% on Friday, as an upturn in stocks snapped demand for safe-haven bets.

But many investors are apparently remaining on the sidelines ahead of Friday’s release of August U.S. employment data.

Mizuho Corporate Bank said Thursday that one of its Chinese units expanded its cooperation with China CITIC Bank to include the field of corporate pensions as of Wednesday.

Under the expanded tie-up agreement, the Mizuho Group unit will introduce its partner to Japanese clients whose Chinese units are considering including corporate pension programs.

Japan’s monetary base rose 5.4% year-on-year to 98.3995 trillion yen in August, the Bank of Japan said Thursday.

The increase came as commercial banks hiked their current account deposits at the central bank, with the BoJ continuing to inject ample funds into financial markets through its emergency lending facility. The BoJ provided three-month loans against pooled collateral at a fixed rate of 0.1%, the same as its policy rate.

U.S. auto sales declined in August sharply and annual auto sales in 2010 are estimated to hover near 11.4 million units.

Toyota Motor sales in August fell 34.1% to 148,388 units from 225,088 units in the same period a year earlier. Sales for the first eight months decreased 0.5% to 1,164,154 from 1,170,409. Sales of the cars decreased 45.0% to 85,264 units from 155,139 units and light trucks fell 9.8% to 63,124 units from 69,949 a year ago.

Honda sales in the month decreased 32.7% to 108,729 units from 161,439 units a year ago. For the year so far, sales rose 1.0% to 0.81 million from 0.80 million. Sales of cars in the month decreased 44.0% to 59,894 units from 106,972 units and sales of the light trucks fell 10.3% to 48,835 units compared to 54,467 a year ago.

Nissan Motor Company vehicles sales in the month decreased 27.0% to 76,827 units from 105,312 units a year ago. For the year so far, sales rose 14.2% to 0.60 million from 0.52 million. August cars sales fell 38.7% and sales of the light trucks rose 6.5% from a year ago.

Singapore-based Redwood Group, which manages real-estate assets in Japan, plans to raise as much as $600 million for a fund that will invest in warehouses in greater Tokyo as trade between Japan and China is expected to increase.

The company aims to raise up to $600 million by June 2011 from investors including pension funds and global endowments, said CEO Stuart Gibson. The loan-to-value ratio of the fund, slated to start in October, will be about 55% to 60%, enabling the company to buy as much as $1.3 billion in properties, he said.

Gainers & Losers

Alps Electric Co led the gainers in the Nikkei with a gain of 4.81% to 610 yen followed by Asahi Kasei Corp 3.78% to 439 yen and Furukawa Electric 3.49% to 326 yen.

Kirin Holdings led the decliners in the index with a fall of 2.35% to 1,162 yen followed by Daiwa Securities Group 2.28% to 343 yen and Yamato Holdings 1.88% to 1,045 yen.