Nikkei Drops; China, Japan Spar

Chandrasekhar Atreya
21 Sep, 2010
New York City

Stocks in Japan drop on China concerns. China suspends ministerial level exchanges with Japan on the recent fishing boat incident. Government Pension Fund is weighing the idea of investment in emerging markets.

[R]5:00 PM Tokyo, Japan – Stocks in Japan drop on China concerns. China suspends ministerial level exchanges with Japan on the recent fishing boat incident. Government Pension Fund is weighing the idea of investment in emerging markets.[/R]

Stocks in Tokyo after hitting a seven-week intraday high, fell in the second session to close lower after the yen strengthened ahead of FOMC meeting and on China concern despite gains in commodities.

The Nikkei 225 Stock Average fell 0.25% or 23.98 to close at 9,602.11. The broader Topix also declined 0.3% to close at 849.94.

Of the 225 stocks in the Nikkei, 58 gained. 153 decreased and 14 were unchanged.

Composite index of coincident economic indicators in Japan rose 0.6% from June to 103 in July, according to revised data released Tuesday by the Cabinet office. The composite index of leading indicators, a barometer of economic conditions several months down the road fell 0.3 point to 100.0.

The average exchange threshold rate for profitability was estimated to be at 93.4 yen to a dollar according to a survey result released Friday by the Japan External Trade organization. The yen has hovered near 85 to a dollar.

JETRO conducted the survey between September 6 to September 13 in response to the yen’s sharp appreciation and received responses from 329 of its 3,595 member companies with small and midsize businesses accounting for 60%.

China suspended its ministerial level exchanges with Tokyo in response to Japan’s decision to extend its detention of the captain of a Chinese fishing boat involved in a collision in disputed waters.

Chinese Foreign Ministry spokesman Ma Zhaoxu warned that China will take strong countermeasures if Japan takes some arbitrary action.

China is also concerned with the appointment of former Transport Minister Seiji Maehara as Japan’s Foreign Affairs Minister who is expected to take a hard line against China.

Japan cannot stem the appreciation of its currency by acting on its own because currency-market intervention by a single country has a limited effect,” said Bank of Korea Governor Kim Choong Soo.

“Japan, alone, cannot resolve the problem of the stronger yen. Japan will need policy coordination with others, including the U.S. and China. The effect is limited when one country tries to handle the issue by market intervention,” said Kim at a media seminar in Incheon, Southeast of Seoul on Friday.

The Financial Services Agency issued a one month business suspension order beginning October 1 to Gaitame.com Co for repeatedly providing erroneous exchange rates, the first suspension of foreign exchange broker for system glitch.

Japan Airlines said Friday it will start offering code-sharing flights with American Airlines Inc and two other members of the oneworld airline alliance from Tokyo Haneda Airport starting October.

With the opening of a new runway late August, Haneda is set to provide international service, with JAL offering 22 daily flights on 11 international routes.

Daiwa Securities Co said Friday it doubled the number of Chinese stocks that can be traded via its online trading service to 778 from today.

The addition of 380 issues will make more than 50% of the stocks listed on the Hong Kong Stock Exchange accessible to customers. The 778 stocks accounted for 96% of the combined market cap of the companies listed on the bourse.

Ito-Yokado Ltd opened Friday the doors of its new shopping center that is equipped with 13,000 LED lights that provide some 70% of the center’s total illumination.

The Ario Hashimoto in Sagamihara, Kanagawa Prefecture, is fitted with more LED lights than any other shopping center in Japan and consumes around half the electricity it would with regular lighting fixtures.

Japan’s public pension fund, the world’s largest with assets totaling 123 trillion yen, is weighing the idea of investing in emerging markets as it faces large payout obligations over the next several years, the Wall Street Journal said citing the find’s President Takahiro Mitani.

The conservative Government Pension Investment Fund, which alone is larger than India’s economy, has a staggering 67.5% of its assets tied up in low-yielding domestic bonds.

The fund plans to sell off a record four trillion yen in assets by the end of March 2011, to free up funds for payouts to Japan’s rapidly ageing population. By the year 2055, 40% of Japan’s population is expected to be over the age of 65.

The Tokyo Stock Exchange will extend trading hours of government bond futures next fall, the first such move in 11 years, as part of its efforts to bolster the futures market.

Trading in government bond futures will be brought forward by 15 minutes from the current 9 a.m. start since Japanese government bond futures transactions in Singapore begin at 8.45 a.m.

Gainers & Losers

Fanuc Ltd led the gainers in the Nikkei with a rally of 3.12% to 10,590 yen followed by Mizuho Trust 2.86% to 72 yen and Shionogi & Co 1.96% to 1,559 yen.

Toyota Motor led the decliners in the index with a fall of 3.46% to 3,070 Nomura Holdings 3.4% to 426 yen and NTT Data Corp 3.19% to 279,500 yen.