Nikkei Dips 2%; Japan Output Falls

Chandrasekhar Atreya
30 Sep, 2010
New York City

Stocks in Tokyo trading declined sharply after indexes fell in Europe and the yen hovered near recent highs. For the month, Nikkei increased 1.7% trailing the gains in other markets. Domestic auto output, vehicle exports and retail sales grew, while factory output drops marginally in August.

[R]5:00 PM Tokyo, Japan – Stocks in Tokyo trading declined sharply after indexes fell in Europe and the yen hovered near recent highs. For the month, Nikkei increased 1.7% trailing the gains in other markets. Domestic auto output, vehicle exports and retail sales grew, while factory output drops marginally in August. Japan develops a vehicle motor that does not depend on rare earth metals.[/R]

Japanese stocks moved moderately in the morning with the benchmark index trading in a tight range of 40 points as many Japanese firms closed their books for the first half.

The stocks fell further in the afternoon session on negative reports from Europe pushing the benchmark index nearly 2% down.

The Nikkei 225 Stock Average fell 1.99% or 190.03 to close at 9,369.35. The broader Topix declined 2.1% to close at 829.51. For the month the Nikkei increased 1.7%.

The Nikkei dropped 0.1% and the Topix dropped 1.4% in this quarter while both indexes had the largest gains in the month since March 2010.

Of the 225 stocks in the Nikkei, only 11 gained, while 212 decreased and 2 were unchanged.

China on Thursday released three of the four Fujita Corp employees detained by it after questioning them for allegedly videotaping military targets in Hebei Province, according to a report by the country’s state-owned Xinhua News Agency.

The yen appreciated Thursday afternoon, briefly touching 83.48 to a dollar after surpassing the previous day’s high of 83.50 and the high since the government and the Bank of Japan intervened in the currency market on September 15.

Domestic car production increased in August for the tenth month in a row, up 20.8% from a year ago, to 690,689 cars, the Japan Automobile manufacturers Association said Thursday.

Passenger car output rose 20.4% to 594,564 units with standard car production advancing 32.6% to 350,038 and the number of small cars built up 1.5% to 153,700.

Exports of cars, trucks and buses from Japan rose 22.5% in August from a year ago, rising for the eighth month in a row, as the growth in vehicle shipments to Europe, Asia, the Middle East and Latin America offset a decline in exports to North America.

Exports totaled 337,163 units in August up from 275,186 in the same month of 2009, the association said.

Retail sales in Japan rose in August, for the eighth month in a row, as eco-conscious customers bought fuel efficient cars to get subsidies, while smokers hoarded cigarettes ahead of a tax hike.

Overall retail sales in August grew 4.3% from a year earlier after rising an adjusted 3.9% in July, data released by the Ministry of Economy, Trade and Industry showed on Thursday.

Mitsui & Co and Tokyo Gas Co said Thursday they have agreed with the Japan Bank of International Cooperation, Sumitomo Mitsui Banking Corp and two other lenders to raise as much as $750 million to buy gas-fired combined cycle power stations in Mexico.

In December, Mitsui and Tokyo gas agreed to buy five local power generation units owned by Spain’s Gas Natural SDG SA through a Mexican joint venture for a deal worth about $1.2 billion which was completed in June 2010.

The industrial production index fell a seasonally adjusted 0.3% in August to 94.5 from a year ago, declining for a third month in a row, the Ministry of Economy, Trade and Industry said in a preliminary report Thursday.

Economy, Trade and Industry Minister Akihiko Ohata said Thursday his ministry wants to set aside funds in the fiscal 2010 supplementary budget for sourcing a stable supply of rare-earth metals, which are crucial to the production of automobiles and electronics.

The move comes after China began restricting exports of the metals to Japan last week.

Sony Corp said Wednesday it will purchase a biomass power plant in Fukushima Prefecture through a joint venture with Tokyo Electric Power Co. The two firms plan to create a 60-40 joint venture early October, with Tepco taking the majority stake. This venture will pay 900 million yen to First Energy Service Co for the power plant with ownership to be transferred late November. Sony will use the green-power generated at the facility to earn more certificates.

Japan Atomic Power Co, Toshiba Corp and Marubeni Corp said Wednesday they will team up with the government in Kazakhstan for nuclear power plant feasibility studies and technological cooperation in the central Asian nation.

The move is part of an agreement signed by the three parties and the state-run National Nuclear Center of the Republic of Kazakhstan.

Toshiba Corp, which is the last one to offer lithium ion batteries, will jointly develop these batteries for hybrid vehicles with Italy’s Fiat SpA and also with Sweden’s Scania AB.

In a move to expand its business for automobile batteries, the Japanese firm will team up with Fiat’s research headquarters and with Scania, the commercial vehicle unit of Volkswagen AG.

Tokyo Electric Power Co announced Wednesday that it will issue as much as 254.15 million shares, or 19% of its outstanding stock to accelerate its investments and shore up its finances.

Tepco plans to use part of the funds from its first stock offering in 29 years, to construct a nuclear plant in Aomori Prefecture and to acquire stake in an Australian LPG development project.

The New Energy and Industrial Technology Development Organization or NEDO, said Wednesday that it has developed a hybrid-vehicle drive motor that does not need rare-earth metals. Hybrid-vehicle drive motors usually contain magnets made of rare earth metals neodymium and dysprosium because conventional ferrite-magnet-based motors are not powerful enough to generate the 50 kilowatt of power deemed necessary for hybrid vehicles, nor are they durable enough.

A team of researchers, including a professor at Hokkaido University, came up with a design that reduces the dispersion of magnetic power and employs a higher number of coils to create a ferrite-magnet motor that delivers sufficient power and durability.

Japan’s October-December crude steel output will likely drop 1.5% from the same quarter a year ago to 26.98 million tons, according to a forecast released Wednesday by the Ministry of Economy, Trade and Industry.

Gainers & Losers

Clarion Co Ltd led gainers in the Nikkei with a gain of 2.11% to 145 yen followed by Daikin Industries 1.45% to 3,140 yen, Sanyo Electric 0.73% to 138 yen, Isuzu Motors 0.62% to 322 yen, Konami Corp 0.27% to 1,474 yen and Nikon Corp 0.26% to 1,548 yen.

Mitsumi Electric Co led decliners in the index with a fall of 7.18% to 1,280 yen followed by Ebara Corp 5.61% to 370 yen, J Front Retailing 4.9% to 388 yen, Shinsei Bank Ltd 4.84% to 59 yen and Sumitomo Osaka Corp 4.67% to 143 yen.