Nikkei Drops on Yen

Chandrasekhar Atreya
25 Oct, 2010
New York City

Japanese stocks were nearly flat with the yen trading at 15-year high and ahead of earnings this week. Trade surplus for September soars but growth of export slows. Prime Ministers of India and Japan look for joint developments of infrastructure, nuclear power and rare earth exploration projects.

[R]5:00 PM Tokyo, Japan – Japanese stocks were nearly flat with the yen trading at 15-year high and ahead of earnings this week. Trade surplus for September soars but growth of export slows. Prime Ministers of India and Japan look for joint developments of infrastructure, nuclear power and rare earth exploration projects.[/R]

Stocks in Tokyo trading edged lower and the yen hovering near its 15-year high ahead of earnings this week.

The Nikkei 225 Stock Average lost 0.27% or 25.55 to close at 9,401.16. Of the 225 stocks in the Nikkei index, 67 gained, 140 decreased and 18 were unchanged.

The yen closed at 80.49 yen to a dollar in Tokyo on Monday.

Japan’s trade surplus expanded 54% in September from a year earlier to 797 billion yen, the Finance Ministry said Monday, based on preliminary customs data.

Exports increased 14.4% to 5.84 trillion yen, and imports rose 9.9% to 5.04 trillion yen. Trade surplus jumped 83% to 3.41 trillion yen in the fiscal first half ending in September.

Imports of rum and rum-based alcoholic beverages rose 7.8% for the first eight months of the year from the same period a year ago to 1.25 million liters, according to data from the Ministry of Finance. The rising demand was partly due to the growing popularity of mojitos, a rum-based cocktail, the data showed.

Toyota Motor Corp said Monday its domestic production fell in September by 1.4% from a year ago to 305,853 units. This was the first decline in 11 months. Exports also fell 11% to 148,836 units for the first drop in nine months while domestic sales dropped 6.3% to 133,843 units, down for the first time in 14 months.

Honda Motor said Monday its domestic production rose for the ninth month in a row in September, rising 21.9% from a year ago, to 94,950 units.

Exports soared 67.1% to 28,293 units for the seventh month in a row of increase, while domestic sales had their first drop in 15 months by sinking 8.1% to 56,995 units.

The effective corporate tax rate of Japan remained the highest among the Group of 20 leading economies for the ninth year in a row, standing at 40.69%, according to a survey by KPMG International.

The rate which includes national and local taxes is far above the world average of 24.99% taken for 114 countries. That average fell 0.45% from last year and more than 6 points from a decade ago.

G-20 financial leaders vowed Saturday to avoid competitive devaluation of currencies, while curbing external imbalances, to set the stage for a more balanced global economic growth.

The average Japanese households this year saved more and shunned riskier financial deposits, according to a survey by a Bank of Japan affiliated body.

The savings totaled 1.79 million in stocks, bonds and mutual funds, up 10.5% from last, according to the survey of 8,000 households conducted by Central Council for Financial Services Information between June 11 and July 20, with 4,035 responding.

With the huge infrastructure development needs of India, Japan and India have “excellent potential to further enhance their economic and industrial ties,” Indian Prime Minister Manmohan Singh told reporters from The Nikkei and other Japanese media in New Delhi recently.

Singh arrived in Japan on Sunday for a two-day visit. He also wanted Japan’s help in expanding production of rare earth metals in India. Japan and India are looking to jointly develop nuclear power generation and infrastructure projects as well.

Gainers & Losers

KDDI Corp led gainers in the Nikkei with a gain of 7.26% to 436,000 yen followed by Takara Holdings 3.94% to 475 yen, Nissan Chemical Industries 3.43% to 995 yen, Sumitomo Osaka 3.18% to 162 yen, Nippon Soda Co 3.06% to 371 yen and Furukawa Co Ltd 2.33% to 88 yen.

Sumitomo Electrical Industries led decliners in the index with a drop of 3.19% to 1,061 yen followed by Shin-Etsu Chemicals 2.99% to 4,225 yen, Resona Holdings Ltd 2.95% to 625 yen, Shionogi & Co 2.72% to 1,467 yen and Dainippon Sumitomo 2.71% to 681 yen.