Nikkei Drops; Japan Retail Sales Grows 1.2%

Chandrasekhar Atreya
28 Oct, 2010
New York City

Stocks fell for the fourth day in Tokyo on the weakness in resource stocks. Bank of Japan said it will consider asset purchase expansion if the economy situation warrants. Retail sale increased 1.2% in September.

[R]5:00 PM Tokyo, Japan – Stocks fell for the fourth day in Tokyo on the weakness in resource stocks. Bank of Japan said it will consider asset purchase expansion if the economy situation warrants. Retail sale increased 1.2% in September.[/R]

Stocks in Tokyo closed lower on the weakness in resource stocks and earnings jitters.

The Nikkei 225 Stock Average fell 0.22% or 21 points to close at 9,366.03. The broader Topix fell 0.4% to 814.33, dropping for the fourth day in a row, the longest streak since August 12.

Of the 225 stocks in the Nikkei index, 47 gained, 167 decreased and 11 were unchanged.

Retail sales for the month of September were up 1.2% from a year ago to 10.66 trillion yen, marking a ninth month in a row of increase, according to preliminary data released by the Ministry of Economy, Trade and Industry.

Sales at large retail stores, together with sales at department stores and supermarkets, dropped 1.1% to 1.47 trillion yen. Same-store sales fell 1.7%, while sales at department stores fell 5% and those at supermarkets rose by a meager 0.1%.

Bank of Japan Governor Masaaki Shirakawa said Thursday that the central bank may expand its asset purchase from the current level if the economic situation deteriorates.

“The BOJ will examine effects and side effects of these measures and if we think find the economic situation changing significantly, we may expand the fund,” Shirakawa told reporters in Tokyo.

After releasing the Outlook for Economic Activity and Prices, the BOJ said the economy is expected to return to a moderate recovery path. The Bank of Japan also decided that it will hold its next policy board meeting on November 4 and 5 instead of November 15 and 16 as originally scheduled.

The central bank is expected to release specific methods for making purchases of exchange traded funds and real estate investment trusts.

Failure to be part of the U.S.-led free trade initiative would bring down Japan’s real GDP by 10.5 trillion yen in 2020 and lead to 812,000 fewer jobs in the automobile, electronics and industrial machinery sectors, according to a projection by the government.

The Ministry of Economy, Trade and Industry based the projection on the assumption that Japan will not be allowed to join the Trans-Pacific Partnership pact the U.S. and eight other countries are seeking to finalize.

South Korea in the meanwhile would sign free trade agreements with the U.S., the European Union and China.

Sumitomo Mitsui Financial Group Inc said Wednesday it will list its ADR on the New York Stock Exchange on November 1, and issue no new shares on listing. The convertible ratio of an original share to an ADR will be 0.2 to 1.

Seven & I Holdings Co said Wednesday it will open a ‘Seven-Eleven’ convenience store, in Chengdu as early as next spring. In December, the company will form a local company with a capital of $30 million.

Seven-Eleven Japan Co will have 81% stake in the new company, while another group co, Ito Yokado Co, will hold the balance 19% stake.

Foreign Minister Seiji Maehara and U.S. Secretary of State Hilary Clinton said Wednesday they have agreed to diversify the suppliers of rare earth minerals following China’s curb on exports to various countries including Japan.

Domestic shipments of 3-D televisions in the April-September half year were 131,000 units or 1.3% of all flat panel TVs shipped in that period, the Japan Electronics and Information Technology Industries Association said Wednesday.

This was the first survey measuring shipments of 3-D TVs since electronics manufacturers started roll out of this product in April.

Nidec Corp said Wednesday it will resort to production of switched reluctance motors for use in industrial machinery from 2012, in a move aimed at reducing reliance on rare-earth metals.

Neodymium and other rare earth metals are often used to improve the performance of permanent magnets in motors. Switched reluctance motors do not use permanent magnets making rare earth unnecessary.

Gainers & Losers

Fanuc Ltd led gainers in the Nikkei with a gain of 5,52% to 11,850 yen followed by Central Japan Rail 3.84% to 622,000 yen, Canon Inc 3.73% to 3,755 yen, NGK Insulators 3.49% to 1,541 yen, Fujitsu Ltd 3.32% to 560 yen and Chiyoda Corp 2.96% to 685 yen.

Taiheiyo Cement led decliners in the index with a drop of 4.26% to 90 yen followed by Asahi Glass Co 4.17% to 781 yen, Meidensha Corp 4.04% to 285 yen, Nippon Soda Co 3.75% to 334 yen, Nitto Boseki Co 3.55% 190 yen and Comsys Holdings 3.43% to 731 yen.