Nikkei 5-Day Rally Halts and Gain 2.64% in the Week

Chandrasekhar Atreya
14 Jan, 2011
New York City

Japanese stocks fell after rallying for five days and closed 2.64% higher for the week. Machine tools orders in December rose for the thirteenth month in a row. Prime Minister Naoto Kan reshuffles his cabinet. The total market cap China bourses exceeds those of Japan by 60% in 2010.

[R]5:00 PM Tokyo, Japan – Japanese stocks fell after rallying for five days and closed 2.64% higher for the week. Machine tools orders in December rose for the thirteenth month in a row. Prime Minister Naoto Kan reshuffles his cabinet. The total market cap China bourses exceeds those of Japan by 60% in 2010.[/R]

Stocks in Tokyo fell nearly 0.9% on a stronger yen and investors awaited earnings next week.

The Nikkei 225 Stock Average lost 0.86% or 90.72 to 10,499.04 and for the week gained 270.12 or 2.64%.

The yen closed the week at 82.47 yen to a dollar and 110.66 yen to a euro in Tokyo today.

Premier Kan revamped his cabinet today in the hope of boosting his popularity and improving relations with the opposition.

Kaoru Yosano, a fiscal conservative with cabinet experience, will join Prime Minister Naoto Kan’s government as Minister for Economic and Fiscal Policy. Yosano, who left the Sunrise Party of Japan on Thursday, will replace Banri Kaieda. Kaeida will take charge as the Minister for Economy, Trade and Industry from Akihiro Ohata, who will move as Minister for Land, Infrastructure, Transport and Tourism.

Machine tool orders in December rose 63.5% to 98.45 billion yen from a year ago month, for the 13th month in a row of growth, the Japan Machine Tool Builders’ Association said on Thursday.

Domestic demand surged 78.5% to 31.47 billion yen while overseas demand rose 57.3% to 66.97 billion yen, the figures showed.

Corporate goods price index of Japan stood at 103.4 in December, up 1.2% from a year ago month, the Bank of Japan said today. This is the steepest rise since November 2008 when the index climbed 3.4%.

Price index rose 10.9% for non-ferrous metals, 10.2% for steel and 7.8% for oil and coal products, on robust demand from China and other fast growing economies.

The total market capitalization of stocks on Chinese bourses was about 60% higher than those of key Japanese market at the end of last year, according to the World Federation of Exchanges.

The overall market cap of shares listed in Hong Kong, Shanghai and Shenzhen grew 15% in 2010 to $6.7 trillion or roughly 560 trillion yen. Meanwhile the total for shares listed on the Tokyo Stock Exchange and the Osaka Securities Exchange rose 16% to $4.1 trillion.

Even as Japanese companies with export units in China welcomed the move to relax some of the rules governing how firms manage their yuan and foreign currencies, many exporters feel the impact of the move would be negligible.

The People’s Bank of China said on Thursday that companies could pursue direct investment overseas in yuan. And since January, exporters have been able to directly deposit foreign currencies from their transactions abroad into overseas accounts.

Sony Corp said on Thursday it will debut 3-D consumer camcorders in April, while Victor Co of Japan plans to bring its own 3-D camcorder to the market early February.

A new Sony Handycam model will offer shooting of full-length high-definition 3-D video with its two sets of lenses, image sensors and image processors. Users will be able to view 3-D images without special glasses on its 3.5 inch LCD.

Stock Movers

Ube Industries Ltd stayed unchanged after Nikkei reported that the company plans a tie up with Hitachi Ltd for lithium ion batteries. Ube closed at 258 yen. Hitachi Ltd declined 1.54% to 447 yen.

Fast Retailing Co increased 6.44% to 12,900 yen, while Nomura Holdings Inc declined 1.81 to 541 yen.

Daiwa Securities Group Inc dropped 2.23% to 438 yen and Nippon Meat Packers Inc fell 1.52% to 1,105 yen.

Among exporters Canon Inc fell 1.3% to 4,185 yen and Fanuc Corp dropped 1.84% to 12,810 yen.