Volatile Trading in Tokyo, Strength in Yen and Commodities

Chandrasekhar Atreya
15 Oct, 2010
New York City

In Tokyo trading, stocks remained volatile and dropped after surging the most in the month on Thursday. The yen rose and investors were focused on earnings season beginning next week. Mizuho Financial booked a loss in its preferred shares for Merrill Lynch holding as it converts to Bank of America shares.

[R]5:00 PM Tokyo, Japan – In Tokyo trading, stocks remained volatile and dropped after surging the most in the month on Thursday. The yen rose and investors were focused on earnings season beginning next week. Mizuho Financial booked a loss in its preferred shares for Merrill Lynch holding as it converts to Bank of America shares.[/R]

Benchmark stock indexes in Japan retreated from the largest gain in a month on Thursday, after the yen rose to a 15-year high profit outlook for exporters.

The Nikkei 225 Stock Average pared 0.87% or 83.26 points to close at 9,500.25 and for the week the index declined 0.9%

The broader Topix dropped 1.3% to close at 826.38 and for the week the Topix dropped 1.6%.

Of the 225 stocks in the Nikkei index, 30 gained, 182 decreased and 13 were unchanged.

The yen appreciated to as much as 80.89 against the dollar Thursday evening in Tokyo, from 81.23 at the close of stock trading on Wednesday and closed at 81.19 to the dollar.

Finance Minister Yoshihiko Noda called on G-20 nations to strengthen cooperation on financial market when they meet in South Korea next week. He was speaking after the yen climbed to 80.89 on Thursday, its highest level since 1995.

Prime Minster Naoto Kan said Friday to step up the country’s efforts to sign economic partnership and free trade agreements with its major trading partners. He promised last Friday that the government will draft guidelines for these agreements before the APEC summit to be held in Yokohama in November.

“I am fully aware that Japan has fallen behind others in this area, and it is necessary to work harder, so that we will not fall further behind,” he said during an upper house budget committee meeting.

Honda Motor Co said Thursday it is recalling 126,774 City and New Fit models of cars in Brazil because of potential problems with the acceleration sensor.

The entrance of dirt and particles into the acceleration pedal mechanism may cause problems in reducing the speed of the automobile and may cause accidents, Honda said in a statement on its Web site.

Mizuho Corporate Bank’s preferred shares in Merrill Lynch & Co will convert into common stock Friday.

The Mizuho Financial Group Inc unit acquired 1.2 billion dollars of preferred shares in the U.S. brokerage giant back in January 2008. A provision requires these shares to be converted into common stocks by Friday. Bank of America purchased Merrill Lynch in January 2009 amid the financial crisis.

As a result of the conversion, Mizuho Corporate Bank will hold roughly 31 million Bank of America shares, or a 0.3% stake with a market value of $400 million. The Japanese bank has already taken an impairment charge against the loss.

Sanei-International Co and Tokyo Style Co decided to merge in the shrinking domestic clothing market despite skeptics who are against the merger.

With roughly 152.5 billion yen in combined annual group sales, the merger will create Japan’s third-largest apparel maker, following World Co and Onward Holdings Co.

Panasonic Electric Works Co and Sanyo Electric Co said Thursday they have developed a solar-powered streetlight whose lithium ion rechargeable batteries allow it to outlast existing lead battery models by 40%.

The streetlight consists of solar cells, lithium ion batteries and LED lighting, all of which have a life span of 10 years.

Isuzu Motors Ltd said it will establish a sales company for replacement parts in Dubai on November 1 to serve the local market better.

With a lineup of 17,000 parts, the company will initially sell them in the United Arab Emirates, Oman and Saudi Arabia. The service area will be expanded to cover the entire Middle East.

More Japanese companies will participate in the third annual trade and investment fair than last year in Dalian, China, according to a Chinese trade promotion organization co-hosting the event.

Japanese participants are expected to increase from the 260 firms of the 2009 fair to 283 this time around, the China Council for the Promotion of International Trade’s Dalian sub-council said Thursday.

Itochu Corp said Friday it will invest about $390 million in an oil shale project in Wyoming run by MDU Resources Group Inc, to expand its sources for energy supplies.

Itochu will buy a 25% stake in about 88,000 acres of the Niobrara shale oil reserve in Wyoming from Fidelity Exploration and Production Co, a unit of MDU, the company said in a statement on its Web site.

Gainers & Losers

Mitsumi Electric Co led gainers in the Nikkei with a rally of 3.46% 1,345 yen followed by NGK Insulators 3.39% to 1,527 yen, Mitsui Chemicals 2.49% to 247 yen, Tokyo Electronics Co 2.47% to 4,765 yen, Sumco Corp 2.43% to 1,348 yen and J Front Retailing 1.88% to 434 yen.

Shinsei Bank led decliners in the index with a drop of 9.59% to 66 yen followed by Sapporo Holdings 8.93% to 316 yen, Nomura Holdings 6.15% to 427 yen, Oki Electric Industries 4.84% to 59 yen, Ebara Corp 4.8% to 357 yen and Chuo Mitsui Trust 4.23% to 294 yen.