Japan and India Sign Free Trade Pact; Banks, Daihatsu Rise

Nigel Thomas
16 Feb, 2011
New York City

Stocks in Japan closed higher as foreign investors shift money to developed market. The yen strengthened. Daihatsu Motor will begin production of low-priced compact cars in Indonesia. Japan and India sign free trade agreement that will eliminate tariff on 94% of trade in ten years.

[R]6:00 PM Tokyo – Stocks in Japan closed higher as foreign investors shift money to developed market. The yen strengthened. Daihatsu Motor will begin production of low-priced compact cars in Indonesia. Japan and India sign free trade agreement that will eliminate tariff on 94% of trade in ten years.[/R]

Stocks in Japan were on the rise as foreign investors continue to pour money in developed markets and exporters estimate higher sales. The weak yen also spurred exporters higher.

Nikkei 225 Stock Average increased 0.6% to 10,808.29 and the broader Topix index gained 0.5% to 967.30.

For the year so far, Topix has added 7.56% and trading volume on the first section of Tokyo increased to 1.84 trillion yen according to the Tokyo Stock Exchange.

The yen closed at 83.72 to a dollar.

India Japan Sign Free Trade Agreement

Japan and India sign a free trade agreement that will abolish duties on 94% of traded over ten years. The deal is expected to boost exports form Japan and expand its exports base and help India attract much needed investment in infrastructure.

Last December, India and China agreed to expand their trade ties to $100 billion in the next five years after Prime Minister Manmohan Singh met Chinese Premier Wen Jiabao.

Japan is seeking to diversify its supplier base after China cuts its rare earth minerals exports.

The bilateral traded between two nations declined 5% to $10.4 in the year ending in March 2010, according to the commerce ministry.

The deal will eliminate tariff on digital video disc players and tractors will be eliminated and on auto parts and diesel engines will be reduced.

India’s Trade Minister Anand Sharma met last night with Prime Minister Naoto Kan and offered to set up a joint fund of $9 billion that will help to set up an industrial corridor between Delhi and Mumbai.

India is seeking $550 billion investment in the next five years and $1 trillion in the five years after that.

Sharma also updated Prime Minister Kan on the corridor project linking Mumbai to capital and develop industrial zones along the 1,500 kilometer span that was started in 2007. The project was funded by a loan from Japanese government and investment from Japanese companies.

Stock Movers

Banks traded higher after Nomura estimate higher stock prices in the second half in a research note.

Mizuho Financial Group Inc increased 1.7% to 171 yen and Sumitomo Mitsui Financial Group increased 2.2% to 3,138 yen.

Tokio Marine Holdings increased 1.7% to 2,735 yen and MS&AD Insurance Group Holdings Inc rose 3.3% to 2,222 yen.

Astellas Pharma declined 1.5% to 3,265 yen after it withdrew application for a new drug to treat circulatory disease treatment.

Daihatsu Motor increased 2% to 1,328 yen after the Toyota subsidiary said it will start making small cars in Indonesia. Toyota Motor declined 0.12% to 3,905 yen.

Sony increased 2.5% to 2,979 yen and Tokyo Electron Ltd gained 2% to 5,648 yen. Nintendo Co soared 4.2% to 25,455 yen.