Nikkei Drops 3% in 2010 as Volumes Drops to 6-year Low

Chandrasekhar Atreya
30 Dec, 2010
New York City

Stocks in Tokyo lost more than 1% after the yen strengthened to a seven-week high. For the year the benchmark index declined 3%. Trading volumes on the Tokyo Stock Exchange is likely to drop for the third year in a row and to six year low.

[R]5:00 PM Tokyo, Japan – Stocks in Tokyo lost more than 1% after the yen strengthened to a seven-week high. For the year the benchmark index declined 3%. Trading volumes on the Tokyo Stock Exchange is likely to drop for the third year in a row and to six year low.[/R]

Stocks in Tokyo fell more than 1% after the yen strengthened to its peak since November 9 and the price of crude oil touched a new high of $91.57 in Tokyo.

The Nikkei 225 Stock Average fell 1.12% or 115.62 to 10,228.92 and the broader Topix fell 1.01% or 9.21 to 898.8.

The Nikkei 225 Stock Average finished the last the year 2010 falling 3% for the first decline in the index in two years.

The foreign exchange market, which is prone to volatility at the year end’s low volume trade, prompted market players to buy the Japanese currency and sell the dollar on expectations interest rates will fall in Japan and the U.S.

The yen further strengthened to 81.49 against the dollar and reached the high last seen on November 9 at 81.42 against the dollar and 107.856 yen to a euro.

The aggregate trading volume on the first section of the Tokyo Stock Exchange is estimated to fall 4% to 5% this year from 341 trillion yen in 2009. The volumes reached 325 trillion yen through Wednesday this year.

The trading volume has declined for three years in a row and the lowest in six years.

Sumitomo Mitsui Financial Group Inc plans to target about 600 billion yen of wealth management assets through a venture with Barclays Inc, in its efforts to move away from traditional retirement savings in Japan.

“Several hundred billion yen in several years is the picture I have now, meaning probably the range of 500 billion yen to 600 billion yen of assets,” Teisuke Kitayama, President of the bank said in an interview in Tokyo this week.

Western companies are more focused on chasing deals in emerging markets and faster growing Asian markets, leaving the Japanese market for local firms, according to a research finding.

There have been 26 buyouts worth $1.4 billion in Japan in 2010, compared with 12 deals worth $3.5 billion last year, says London-based research firm Preqin Ltd.

Bilateral trade between Japan and Vietnam is expected to reach $16 billion in 2010, up 24% from last year, the Vietnamese government said Thursday.

Vietnam exports mainly farm products, seafood, garments and wood products, while imports machinery, electronic products and steel from Japan. Exports from Vietnam are expected to go up 24.4% this year to $4.85 billion, the government said in a statement.

Sony Corp has filed a patent infringement complaint against LG Electronics, seeking to block shipping of mobile phones to the U.S by the South Korean electronics manufacturer, the U.S. International Trade Commission said on Tuesday.

In its statement, the U.S. trade watchdog said the complaint by Sony Corp alleged that LG violated U.S. trade rules by importing and selling certain mobile phones and modems that infringed on the patents held by Sony Corp.

Stock Movers

Of the 225 members in the benchmark index 209 traded down and 8 gained, as traded locked in profits following gains on Wednesday’s morning session.

Hitachi Ltd gained 1.88% to 433 yen and Uny Co Ltd gained 2.24% to 821 yen.

Toyota Motor lost 0.92% to 3,220 yen and Nissan Motor Co fell 1.53% to 773 yen.

Panasonic Corp dipped 0.95% to 1,153 yen and Nikon Corp dropped 1.55% to 1,647 yen.

Nisshin Steel and CSK Corp were the maximum losers with 3.72% and 3.87% drop to 181 yen and 373 yen respectively.