Nikkei Struggles as the Yen Rises

Chandrasekhar Atreya
08 Oct, 2010
New York City

Stocks in Japan declined as the yen traded at elevated level. Cabinet approves higher stimulus plan. Total liabilities of failed companies, with at least 10 million yen of debt, surged 360% in September. Current account surplus shrinks in August for the first time in more than a year.

[R]5:00 PM Tokyo, Japan – Stocks in Japan declined as the yen traded at elevated level. Cabinet approves higher stimulus plan. Total liabilities of failed companies, with at least 10 million yen of debt, surged 360% in September. Current account surplus shrinks in August for the first time in more than a year.[/R]

Tokyo stocks traded lower as the yen hovered near 15-year high and as world financial leaders gather this weekend. The yen stayed firm as the talks heat up among China, U.S. and Europe to decide the fate of the dollar.

The Nikkei 225 Stock Average lost 0.99% or 95.93 points to close at 9,588.88 and gained 1.96% in the week. The broader Topix fell 0.8% to close at 839.44 and added 1.1% in this week. Both gauges had the first weekly climb in three weeks.

Of the 225 stocks in the index, 65 gained, 149 decreased and 11 were unchanged.

After fetching 82.75 in New York overnight, the Japanese yen briefly touched 82.62 against the dollar on Friday afternoon in Tokyo, hitting its highest since May 1995.

Business confidence among store owners, taxi drivers and other consumer driven operations sensitive to the economy fell 3.9 points to 41.2 in September from August, making it two months of decline in a row, according to the latest Economy Watchers Survey released by the Cabinet Office on Friday.

Total liabilities of companies that went under with debts of at least 10 million yen surged 360% in September from a year ago to 1.42 trillion yen, Shoko Research Ltd said Friday.

The number of such corporate failures, including those that were cut off by their bankers, fell 4.58% on the year to 1,102 in September, down for the 14th month in a row. However, total liabilities zoomed after the high profile collapses of Takefuji Corp and the Incubator Bank of Japan since these two companies alone accounted for about 80% of the total.

The Cabinet approved the draft of a new stimulus plan worth about 5.05 trillion yen as Japan seeks to boost the flagging economy of the nation. The government decided to raise the amount from the initial 4.8 trillion yen after talks with the coalition partner, the People’s New Party.

These new measures are expected to give the economy a shot in the arm worth 21.1 trillion yen by creating 450,000 to 500,000 new jobs and boosting the GDP by 0.6%.

Japan’s current account surplus shrunk in August for the first time in more than a year, as exports lost steam due to slower growth in overseas markets and a strengthening yen. Current account surplus fell 5.8% in August from a year earlier to 1.114 trillion yen before seasonal adjustments, the Ministry of Finance said Friday.

The Cabinet approved a bill on Friday morning to reorganize Japan Post, with little changes to the moves in the ordinary Diet session. Under the revised bill, the reorganization will be implemented in April 2012, instead of October 2011.

Mitsubishi Materials Corp said it will embark on full-scale efforts to develop technology that can recover and reuse rare earth metals from magnets used in various appliances.

The move comes in the wake of Chinese embargo on export of rare earth metals and Mitsubishi hopes to research low-cost technologies and be ready for practical applications by 2014.

Panasonic Corp said Thursday it has succeeded in its tender offers for both Sanyo Electric Co and Panasonic Electric Works Co, ramping up its stake in both to over 80%. This would mean the two companies are almost certain to become wholly owned subsidiaries of Panasonic Corp.

The company will spend some 261 billion yen and 264.2 billion yen respectively to buy the tendered shares for a total of roughly 525.2 billion yen.

Panasonic Corp also said Thursday it will cancel a 500 billion yen shelf registration that it filed in July to issue new shares, after reviewing the results of the tender offer it launched for Sanyo Electric Co and Panasonic Electric Works Co to make them wholly-owned subsidiaries.

Japan offered to build a nuclear power plant in Turkey, according to Energy Minister Taner Yildiz.

“Japan has submitted an offer through Toshiba to build nuclear plants,” Yildiz told reporters after meeting with Toshiba officials in Ankara.

Machine tool orders rose 110% in September from a year ago to 91.71 billion yen, for a 10th month of expansion in a row, the Japan Machine Tool Builder’s Association said in a preliminary report on Thursday.

Domestic orders jumped 38.2% to 27.03 billion yen while overseas orders nearly tripled, up 180% to 64.69 billion yen.

China sold a record amount of Japanese debt in August, snapping seven months of purchase a row, according to the Ministry of Finance.

China cut Japanese debt holdings by a net 2.02 trillion yen for the biggest monthly sale in data going back to 2005, the Ministry of Finance said Friday.

Gainers & Losers

Shinsei Bank Ltd led gainers in the Nikkei index with a gain of 6.15% to 69 yen followed by GS Yuasa Corp 4.62% to 611 yen, Inpex Corp 3.66% to 439,000 yen, Panasonic Corp 3.43% to 1,176 yen, Isetan Mitsukoshi Holdings 3.19% to 971 yen and Mitsubishi Electric Corp 2.56%to 761 yen.

Casio Computers Ltd led decliners in the index with a fall of 6.34% to 606 yen followed by Nitto Boseki Ltd 4.04% to 190 yen, Toyo Seikan 3.97% to 1,453 yen, Chiyoda Corp 3.77% to 714 yen, Shiseido Co Ltd 3.83% to 1,760 yen and Seven & I Holdings 3.71% to 1,975 yen.