Japan Sentiment Up; China Holds Minerals Exports

Chandrasekhar Atreya
29 Sep, 2010
New York City

Japan indexes staged a minor rally after a quarterly survey of business sentiment among large corporation showed improved sentiment. However the plans for capital expansion are less than expected and the sentiment is expected to turn negative in the next quarter.

[R]5:00 PM Tokyo, Japan – Japan indexes staged a minor rally after a quarterly survey of business sentiment among large corporation showed improved sentiment. However the plans for capital expansion are less than expected and the sentiment is expected to turn negative in the next quarter. China said it will start accepting applications for export of rare earths.[/R]

Japanese stocks climbed after a report showed the diffusion index of large manufacturers rose more than expected in the quarter to September. The sixth quarterly increase in business sentiment lifted the indexes.

The Nikkei 225 Stock Average gained 0.67% or 63.62 to close at 9,559.38, paring an earlier gain of 1.1%. The broader Topix added 0.5% to close at 846.97.

Of the 225 stocks in the Nikkei index, 167 gained, 45 decreased and 13 were unchanged.

China sold rare earths to a Japanese company through Malaysia, raising hope that exports may resume as Japan considers alternatives.

Chinese customs authorities notified Japanese businesses late Tuesday that they will start accepting applications to export rare earth metals to Japan the following day, sources at a local office of a Japanese trading firm said today.

The diffusion index of major manufacturers for the July-September quarter rose to 8, the Bank of Japan reported. The better-than-expected increase in the index lifted the index in trading. Large companies are expected to increase capital spending by 2.4% in the current fiscal year but less than what some economists were estimating.

The sentiment is expected to turn negative both among manufacturers and service providers in the next quarterly survey.

Prime Minister Naoto Kan called on Japanese business houses to invest more in the country in order to revive Japan as an attractive place for investment. He was addressing a roundtable meeting of top leaders of industry and labor held at his residence.

The Prime Minister urged Japanese businesses to put the hoards of cash they hold to productive use, saying, “I want you to invest actively with a gaze towards the future.”

Mizuho Corporate Bank said Tuesday it arranged a five-year $70 million syndicated loan for state-run Export-Import Bank of India, the first of its kind by a Japanese private sector lender for an Indian borrower.

Asahi Breweries will close its Nishinomiya plant in Hyogo Prefecture at the end of August 2011, company’s first closure in nine years.

The move announced late Tuesday is expected to save the brewer 4.5 billion yen annually. The plant’s production functions will be transferred to another plant in the Suita section of Osaka. This will leave Asahi with eight domestic plants for beer and related beverages and will reduce output by 14% to 2.4 million kiloliters per year.

Sumitomo Corp said Tuesday it will invest in the aluminum smelting business in Malaysia by acquiring a 20% stake in the local firm Press Metal Sarawak Sdn Bhd. The company already participates in aluminum smelting in Australia and Brazil.

Press Metal Sarawak is involved in a project to build two aluminum smelters in Malaysia and the first factory is scheduled to become fully operational at the year’s end and will be capable of producing 120,000 tons of aluminum annually. The second plant with double that capacity is expected to be fully operational by the end of 2012.

Fujitsu Ltd on Tuesday started delivering its supercomputer to a research lab in Kobe. Around 800 computer racks will be shipped to a government affiliated research institute Riken’s Kobe facility, with operations scheduled to start in fall of 2012.

Known as the “K”, the computer is expected to have a 10 petaflop processing speed, performing 10 quadrillion calculations in a second which will make it the world’s fastest computer.

Jtekt Corp plans to set up a joint venture in China to produce and market automotive bearings. The affiliate of Toyota Motor said Tuesday, it will establish a 50:50 joint venture with Wafangdian Bearing Group Corp, a leading producer of bearings in Liaoning province, with a total investment of 1 billion yuan or 12.5 billion yen.

Toyota Motor Corp said it has set up a task force on rare earth minerals used in Hybrid cars amid reports that China has de facto banned exports of these items. China controls 90% of the global market of these rare earth minerals.

Marubeni Corp said Wednesday it will join a $600 million refinery project in Mongolia. The firm will work with Toyo Engineering Corp to build, maintain and operate the facility.

The refinery located 200 kilometers north of Ulan Bator is slated for production in 2014 with a capacity of 44,000 barrels per day, Marubeni said in a statement on Wednesday.

Gainers & Losers

Shinsei Bank Ltd led gainers in the Nikkei with a rally of 6.9% to 62 yen followed by Fuji Heavy Industries 5.79% to 530 yen, Toho Zinc Co Ltd 4.64% to 338 yen, Meidensha Corp 4.22% to 321 yen, Japan Steel Works Ltd 3.44% to 811 yen and Pioneer Corp 3.42% to 302 yen.

Tokyo Electric Power Co led decliners in the index with a fall of 7.76% to 2,105 yen followed by Central Japan Rail Co 3.53% to 628,000 yen, Kansai Electric Power 2.99% to 2,078 yen, Okuma Corp 2.45% to 477 yen, Chibu Electric Power Co 2.35% to 2,115 yen and Keisei Electric Rail 1.96% to 549 yen.