Japan Stocks Ease; Tepco Declares $15 Billion Loss

Nigel Thomas
20 May, 2011
New York City

Stocks in Japan struggled despite foreign investors added net to net holdings for the 28th week in a row. Tepco reported 1.25 trillion yen or $15.2 billion of loss after the close. Banks declined on the uncertainty linked to Tepco debt.

[R]4:30 PM Tokyo – Stocks in Japan struggled despite foreign investors added net to net holdings for the 28th week in a row. Tepco reported 1.25 trillion yen or $15.2 billion of loss after the close. Banks declined on the uncertainty linked to Tepco debt.[/R]

Stocks in Japan struggled after utilities and banks declined for the fifth day this week after comments from the government. Bank of Japan left its bond buying program and interest rate unchanged after a rate setting meeting.

Utilities fell on the worries that power generation and distribution businesses may be separated and companies are required to share in compensation payment linked to tsunami and earthquake disasters.

Separately, Tokyo Electric Power Co reported a net loss of 1.25 trillion yen or $15 billion after the close. In addition, President Masataka Shimizu will resign according to a company statement.

The loss is the second largest loss reported by any Japanese company in a decade trailing the loss of 2.4 billion yen declared by Mizuho Financial Group Inc in 2002 according to the earnings database compiled by Ticker.com.

The Nikkei 225 Stock Average declined 0.1% to 9,607.08 and broader Topix index fell 0.5% to 827.77.

Trading volume on the first section of Tokyo Stock Exchange declined to 1.68 billion shares, below the average for the last two weeks.

The yen closed at

The Bank of Japan left its key overnight lending rate at zero to 0.1% and committee of eight unanimously decided to maintain a 30-trillion yen credit program and 10-trillion yen asset purchase program.

Stock Movers

Utilities led the decliners in trading in Tokyo.

Tepco dropped as much as 9% but closed up 2.4% to 367 yen ahead of loss release after the close. Kansai Electric declined 4.9% to 1,331 yen and Chubu Power fell 4.5% to 1,225 yen.

Banks declined on the worries on the uncertainty related to Tepco debt and the head of Japan’s banking industry said banks do not intend to write-off loans.

Sumitomo Mitsui Financial Group declined 2% to 2,365 yen and Mitsubishi UFJ Financial Group fell 0.8% to 375 yen.

Toshiba Corp increased 0.9% to 435 yen after the diversified organization agreed to acquire Switzerland based smart meter maker Landis+Gyr for $2.3 billion.

Energy and resource linked stocks declined after base metals and crude oil prices fell in New York trading.

Cement makers closed lower. Sumitomo Osaka Cement Co dropped 2.2% to 216 yen and Taiheiyo Cement eased 1.85% to 153 yen.

Japan Petroleum Exploration Co declined 2.35% to 3,624 yen and Inpex fell 4% to 532,000 yen.

Mitsubishi Corp declined 1.3% to 2,032 yen and Marubeni and Mitsui Corp declined more than 0.4%.

Internet stocks focused on Japan increased after LinkedIn soared on its first day of trading in New York.

Gree Inc increased 3.5% to 1,654 yen and Mixi Inc gained 0.1% to 296,400 yen.