Nikkei in Tokyo Drops 2.1%, Softbank Plunges 12%

Nigel Thomas
22 Sep, 2011
New York City

Stocks in Tokyo edged lower as markets in Asia declined after the U.S. Fed action was less than expected. The banks led the decliners after the European risk monitoring agency cited rising risks to financial system. Softbank dropped 12% after it lost its exclusive rights to sell iPhone in Japan.

[R]6:00 PM Tokyo – Stocks in Tokyo edged lower as markets in Asia declined after the U.S. Fed action was less than expected. The banks led the decliners after the European risk monitoring agency cited rising risks to financial system. Softbank dropped 12% after it lost its exclusive rights to sell iPhone in Japan.[/R]

The Japanese benchmark index dropped 2.1% after markets in Asia declined after the U.S. Fed announcement fell short of market expectations and in addition China reported slowing economic activities in September.

The banks were among the leading decliners after the European risk monitoring agency warned of rising risks to the financial systems in the euro zone and urged all authorities to take swift actions.

The market sentiment was weak after the U.S. Federal Reserve Chairman Ben S. Bernanke’s efforts to revive the faltering economic growth fell short of the market expectations.

The U.S. Fed plans to sell as much as US$400 billion of short term U.S. bonds and buy bonds of maturities of at least six years to bring down the long term rates. After the decision in late afternoon yesterday, U.S. 10-year bond yield fell to 1.85% from 1.93% and the yield of 30-year bond declined to 3.02% from 3.2%.

In addition, China’s Manufacturing Purchasing Index declined to 49.4 in September from final 49.9 in August. The data tracked by HSBC are a private estimate and the government estimate is expected next week.

The preliminary report showed manufacturing contraction for the third month in a row.

The index indicated shrinking manufacturing and soft landing in Chinese manufacturing and economic growth is expected to slowdown to between 8.5% and 9% in the second half from the 9.5% growth in the second quarter.

The Nikkei 225 Stock Average fell 2.1% to 8,560.26 and the broader Topix index declined 1.7% to 744.54.

The yen edged lower to 76.36 from 76.41 against one dollar and the euro rose from the 10-year low to 104.15 after trading at 104.82 yesterday.

Trading volume on the First Section on the Tokyo Stock Exchange decreased to 1.44 billion shares, lower than 1.75 billion shares average last week.

Stock Movers

Softbank plunged 12.3% to 2,282 yen and declined as much as 2,271 yen the lowest level since July 2010 after a report said that the company will no longer be the exclusive seller of Apple Inc’s iPhone in Japan. KDDI is expected to start selling the phones from November.

Dai-ichi Life dropped 3% to 77,300 yen after the insurer said it held in June 330 billion yen or $4.2 billion of Italian and Spanish bonds.

The European Systemic Risk Board today urged concrete and swift action from bureaucrats and politicians to stem the “considerable” increase in threats to financial system and banks.

The ESRB, risk watch dog said that funding vulnerabilities within the European Union banking sector and weakening growth outlook need a decisive action from all authorities.

Nippon Yusen KK dropped 3 yen to 213 yen and Mitusi OSK Lines Ltd declined 4.7% to 305 yen.

Banks were lower after a research report from BNP Paribas painted weak earnings growth outlook for banks and the rating agency Moody’s lowered rating on debts of Bank of America, Citigroup and Wells Fargo.

Mitsubishi UFJ Financial Group fell 1.5% to 332 yen and Sumitomo Mitsui Financial Group decreased 1.8% to 2,089 yen. Mizuho Financial Group Inc decreased 1.8% to 112 yen.

The Tokyo Electric Power Company, Inc declined 9 yen to 299 yen on the ongoing worries of financial stability of the company.

Toyota Motor decreased 1.7% to 2,628 yen and Honda Motor Co. dropped 3.9% to 2,275 yen and Nissan Motor decreased 19 yen to 643 yen. Suzuki Motor decreased 14 yen to 1,637 yen.

Sony Corp fell 1.8% to 1,484 yen, Panasonic Corp fell 17 yen to 735 yen and Canon Inc decreased 50 yen to 3,355 yen. Sharp Corp declined 7 yen to 611 yen.

Olympus fell 61 yen to 2,226 yen. Fanuc fell 4% to 10,830 yen. Kyocera fell 2% to 6,540 yen.

Komatsu fell 52 yen to 1,698 yen and Hitachi Construction Machinery Co declined 49 yen to 1,244 yen.