Japan Left Rates on Hold; Shipping Companies at 10-year Low

Nigel Thomas
16 Nov, 2011
New York City

Japanese stocks declined and Bank of Japan left its key lending rate near zero and held its asset purchase program at $260 billion. Central bank also lowered its economic assessment and highlighted risks emerging from the euro zone.

[R]6:00 PM Tokyo – Japanese stocks declined and Bank of Japan left its key lending rate near zero and held its asset purchase program at $260 billion. Central bank also lowered its economic assessment and highlighted risks emerging from the euro zone.[/R]

The Nikkei 225 Stock Average fell 0.9% to 8,463.16 and the broader Topix index fell 0.9% to 724.11.

Bank of Japan left its key lending rate unchanged near zero and also held its asset purchase program at 20 trillion yen or $260 billion.

The nine-member board voted unanimously to hold the key rate between zero and 0.1%.

The decision was widely anticipated by the market and central bank also lowered its economic outlook for the year and cited debt crisis in Europe.

Central bank governor Masaaki Shirakawa said financial system liquidity is stable so far but “if bigger financial turmoil occur in the global market” Japanese banks “will not be immune from it.”

Shirakawa added that the rise in the yen and euro zone crisis are affecting the Japanese economy as exports are vulnerable to the slowdown in the region. Other external factors like flooding in Thailand are also affecting exports.

Central bank governor also added that “long term rates in Japan cannot stay at current level permanently.” He added, more than 90% of Japan’s government bonds are held domestically but no country can accumulate unlimited debts.

Stock Movers

Nisshin Steel Co increased 2.8% to 111 yen and Nippon Metal Industry Co eased 2.7% to 71 yen after two companies announced that they plan to set up a holding company and merge by October next year.

Toyota Motor decreased 4 yen to 2,467 yen and Honda Motor Co. decreased 49 yen to 2,224 yen and Nissan Motor Co Ltd fell 17 yen to 694 yen.

Sony Corp decreased 45 yen to 1,308 yen, Panasonic Corp closed down 8 yen at 684 yen and Canon Inc fell 20 yen to 3,365 yen.

Nintendo Co. Ltd fell 250 yen to 11,830 yen.

Olympus Corp increased 100 yen or 15.6% to 740 yen and the stock has been on the rebound after rumors of delisting faded away. Company lenders also met management but did not change any loan terms according to sources close to the management.

Nomura Holdings, Inc decreased 4.4% to 242 yen on the worries that investigation in Olympus may lead to fines on the speculation that the broker helped the camera maker hid losses for more than a decade. The company has denied the allegations.

Fanuc Ltd decreased 100 yen to 12,720 yen and Kyocera closed down 50 yen at 6,550 yen. Nikon Corp fell 5 yen to 1,728 yen.

Shipping companies closed at a new 10-year low on the worries linked to the euro zone and the freight rate to Europe declined.

Mitsui OSK Lines, Ltd fell 9 yen to 251 yen, Kawasaki Kisen Kaisha, Ltd closed down 3 yen to 134 yen and Nippon Yusen K.K. decreased 6 yen at 169 yen.

Dai-ichi Life fell 300 yen to 79,400 yen.

Property and Casualty insurers remain in focus as Thailand struggles with the rising flood losses and Japan accelerates efforts to rebuild the tsunami affected region.

MS & AD Insurance Group Holdings, Inc closed up 1 yen at 1,524 yen and NKSJ Holdings Inc fell 4 yen to 1,528 yen.

Mitsubishi UFJ Financial Group closed down 3 yen at 331 yen and Sumitomo Mitsui Financial Group increased 5 yen to 2,099 yen.

Komatsu Ltd decreased 34 yen to 1,952 yen and Hitachi Construction Machinery Co decreased 59 yen to 1,421 yen.

Elpida Memory Inc rose 8.9% or 29 yen to 359 yen after the DRAM memory maker said it will cut the capacity to revive market prices.

The stock dropped yesterday on the worries that it may be removed from the MSCI Japan index list but the index publisher MSCI left the company on the list.

MSCI said Mitsui Engineering and Shipbuilding Co and Minebea Co will be dropped from the index effective changes on November 30. Mitsui Engineering declined 4% and Minebea gained 0.7%.

Sanrio Co declined 0.7% to 4,060 yen, the maker of gifts products and theme parks operator was picked to be added to the Japan index tracked by MSCI.