Nikkei Lags World Markets as Yen Strengthens

Chandrasekhar Atreya
01 Oct, 2010
New York City

Stocks in Japan continue to trail the world market gains in the week, month and in the fiscal first half. The benchmark index declined 15.5% in the first six months to September after a steady rise in the yen. Consumer prices and jobless rates drop in August.

[R]5:00 PM Tokyo, Japan – Stocks in Japan continue to trail the world market gains in the week, month and in the fiscal first half. The benchmark index declined 15.5% in the first six months to September after a steady rise in the yen. Consumer prices and jobless rates drop in August. Auto sales dropped for the first time in 14 months. Share buybacks soars in September.[/R]

Japan’s benchmark index climbed led by developers as housing starts rose for a third month in a row and unemployment rate fell, while shipping lines declined after an index of cargo rates dropped.

The Nikkei 225 Stock Average rose 0.4% to close at 9,404.23. The broader Topix gained less than 0.1% to close at 829.97 after fluctuating between gains and losses more than 30 times in the day’s trade.

123jump.com data suggests that the benchmark index in Japan trailed to the gains in world markets among the 20 largest markets around the world.

For the week, the Nikkei 225 lost 0.7%, while the Topix lost 1% with both indexes declining for the second week in a row. Of the 225 stocks in the Nikkei index, 118 gained, 89 decreased and 18 were unchanged.

Tokyo stocks dropped 15.5% in the first half of the fiscal 2010, with investor sentiment dampened by the yen’s rise against the dollar.

On Thursday, when many Japanese companies close their books for the fiscal first half, the Nikkei 225 Stock Average ended at 9,369.35 down 1,720 points or 15.5% from six months earlier.

Housing starts in Japan rose 20.5% in August from a year earlier to 71,792 units, expanding for the third straight month, the Land Ministry said Thursday.

Seasonally adjusted jobless rate in Japan fell to 5.1% in August from 5.2% in July, the government said Friday.

Consumer prices fell in August for the 18th month in a row, government data showed Friday.

Japan’s core consumer price index, which excludes volatile fresh food prices, fell 1% from a year ago, the Ministry of Internal Affairs and Communications said. The latest data show that the pace of decline eased, with the prices fell 1.1% in July and 1% in June compared with a recent decline of 1.5% in April.

Average monthly household spending, based on households with two or more people, rose by a deflation-adjusted 1.7% from a year ago to 293,361 yen in August, marking the third month of increase, the Internal Affairs Ministry reported Friday.

The average monthly spending of salaried households came to 323,758 yen, up 2.7% from a year ago, marking the third month of expansion in a row.

Car sales dropped 4.1% in September to 308,663 units from a year ago, the first drop after 13 months in a row of increase, the Japan Automobile Association said Friday.

Passenger car sales shrank 5.4% to 278,283 and of that, sales of regular passenger cars increased 2.3% to 140,555, while mini car sales declined 12.2% to 137,728 units. For the six months to September, car sales increased 19.9% to 1.67 million.

Taiyo Life Insurance Co said Friday it secured a total of 48.6 billion yen in capital at the end of September to enhance its financial strength. The life insurer secured 31.1 billion yen in subordinated bonds and 17.5 billion yen in subordinated loans, which is expected to raise its solvency margin ratio about 100 basis points.

Chuo Senko Advertising Co is set to file for bankruptcy with the Tokyo District Court as early as Monday, saddled with liabilities of 7.6 billion yen.

KDDI Corp will join forces with Jupiter Telecommunications Co, to deliver movie-related content to cellular phones and cable television.

South Korea’s National Pension Service, the world’s fifth-largest pension fund, Thursday said it will invest $400 million in real estate markets of Australia, Japan and China in its latest move to boost its overseas exposure.

A National Pension Service official said the service will invest in a fund managed by Pramerica Real Estate Investors, a real estate investment arm of U.S.-based Prudential Financial Inc.

Amid languishing share prices, listed firms in Japan stepped up share buybacks in the April-September period, recording the first increase since the second half of 2007.

Repurchases grew 6% from a year ago to 380.7 billion yen. Buybacks came to just 299 billion yen for April-August period, down roughly 10%. But in September, buybacks soared 170% to 81.5 billion yen.

The government sold 2.125 trillion yen through currency intervention in September to tame the currency’s persistent climb against the greenback, the Ministry of Finance said Thursday.

The Finance Ministry, using the Bank of Japan as its agent, intervened on September 15 to dump yen for the first time in six and a half years after the yen hit a 15-year high of 82.87 yen to the dollar.

U.S. mine operator Molycorp Minerals will reopen one of the world’s largest rare earth mines at Mountain Pass in California to ease the supply position after China tightened restrictions on its export.

The U.S. firm will extract nine types of rare earths from the mine, including cerium, lanthanum and neodymium, which are essential to the manufacture of hybrid cars and optical lenses, among other products.

Tokyo’s carbon trading market, the first of its kind in Asia, could be a model for a national system as local governments show interest in the program, said Masanori Eto, a director at the Japan Climate Exchange Corp.

The first carbon credits in Tokyo’s system were sold in August on an online marketplace operated by Japan Climate Exchange.

Gainers & Losers

Mitsui Fudosan led gainers in the Nikkei with a gain of 3.69% 1,460 yen followed by Dai Nippon Sumitomo Corp 3.43% to 723 yen, Mitsubishi Estate 3.24% 1,402 yen, Chiyoda Corp 2.49% to 700 yen, Nomura Holdings 2.48% to 414 yen and Fuji Heavy Industries 2.44% to 545 yen.

Nippon Sheet Glass led decliners in the index with a drop of 5.49% to 172 yen followed by Sumitomo Chemical Co 5.19% to 347 yen, Fuji Electric Holdings 4.11% to 210 yen, Kujima Corp 3.98% to 193 yen, Kawasaki Kisen 3.18% to 304 yen and Showa Denko K. K 3.12% to 155 yen.