Nikkei Falls 1.2%; Thai Floods Insured Loss Estmated at $9 Billion

Nigel Thomas
18 Nov, 2011
New York City

Stocks in Tokyo edged lower as investors as export led companies battle record strong yen, weak outlook in the euro zone and supply disruption linked to Thailand floods. Tokio Marine estimated flood related costs of $1.3 billion and Mitsui estimated $1.7 billion.

[R]6:00 PM Tokyo – Stocks in Tokyo edged lower as investors as export led companies battle record strong yen, weak outlook in the euro zone and supply disruption linked to Thailand floods. Tokio Marine estimated flood related costs of $1.3 billion and Mitsui estimated $1.7 billion.[/R]

Stocks in Japan traded lower as investigators zone in on the links between the Olympus management and the organized crime. Long term investors in the company have cut their holdings in the camera maker.

Market sentiment has been dented all week with the impasse in the euro zone as Germany and the European Central Bank resist the calls for central bank intervention.

Japanese regulators are increasingly worried that banks in Japan will face challenging environment to access funding in international wholesale markets, the near record strength in the yen and weakness in the euro zone will drag exports.

The Nikkei 225 Stock Average decreased 1.2% to 8,374.91 and the broader Topix index fell 1.1% to 719.98. For the week, the Nikkei declined 1.6%.

Trading volume decreased to 1.45 billion from 1.52 billion shares on Thursday and lower than the weekly average of 1.74 billion shares.

Insurance companies are bracing for higher than estimated Thailand flood costs. Though it is earlier to estimate the total cost, private insurer and reinsurers are pegging the costs to be at least more than $9 billion.

Office of Insurance Commission in Thailand has estimated insured losses of $6.5 billion as all seven industrial estates in the country are damaged and at least 140,000 businesses are closed.

Private estimates from Munich Re and Swiss Re suggest total losses that may cross $9 billion as more claims are filed for business interruption and machinery damages.

Mitsui estimated its costs of losses linked to the flood to be at least 130 billion and Tokio Marine estimated total loss of 100 billion yen. Hannover Re losses from the flood could be as high as $135 million.

Stock Movers

Automakers have lost at least 30% from the peak in the first week in July on supply chain disruptions linked to Thailand, strong yen and weak exports to the euro zone.

Toyota Motor decreased 57 yen to 2,448 yen and Honda Motor Co. fell 53 yen to 2,202 yen and Nissan Motor Co Ltd decreased 17 yen to 673 yen.

Toyota has lost 33% since July 8 peak, Nissan has declined 20% and Honda has fallen 29%.

Sony Corp decreased 19 yen to 1,303 yen, Panasonic Corp closed down 6 yen at 686 yen and Canon Inc fell 15 yen at to 3,350 yen.

Nintendo Co. Ltd fell 60 yen to 11,620 yen.

Olympus Corp decreased 122 yen or 16% to 625 yen and was the most actively traded stock on the Tokyo Stock Exchange.

Long term shareholders have been lowering their holdings in the company as securities regulators and Tokyo police look conduct their investigations.

Mitsubishi UFJ Financial affiliated entities lowered their holdings to 7.61% from 10%, according to a regulatory filing. Yesterday, Nippon Life Insurance said it cut its stake in the company from 8.2% to 5.1%.

Fanuc Ltd decreased 310 yen to 12,440 yen and Kyocera closed down 70 yen at 6,560 yen. Nikon Corp rose 20 yen to 1,733 yen. Elpida Memory Inc decreased 1.1% to 344 yen.

Shipping companies closed at new 10-year lows for the second day in a row on the worries linked to the euro zone and the freight rate to Europe declined.

Mitsui OSK Lines, Ltd fell 7 yen to 245 yen, Kawasaki Kisen Kaisha, Ltd declined 1 yen to 132 yen and Nippon Yusen K.K. decreased 3 yen at 166 yen.

Dai-ichi Life decreased 2,100 yen to 77,700 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 fell 34 yen to 1,490 yen and NKSJ Holdings Inc fell 24 yen to 1,501 yen.

Mitsubishi UFJ Financial Group fell 6 yen at 325 yen and Sumitomo Mitsui Financial Group decreased 58 yen to 2,051 yen.

Komatsu Ltd increased 2 yen to 1,925 yen and Hitachi Construction Machinery Co decreased 30 yen to 1,376 yen.