Third Quarterly Economic Contraction in Japan

Hiruki Nakamura
14 Feb, 2013
New York City

Stocks in Tokyo traded higher and the Bank of Japan left its asset purchase program unrevised. Economy contracted for the third quarter in a row and weakness in international traded negatively affected the growth. Asahi Group estimated higher earnings.

[R]5:00 PM Tokyo – Stocks in Tokyo traded higher and the Bank of Japan left its asset purchase program unrevised. Economy contracted for the third quarter in a row and weakness in international traded negatively affected the growth. Asahi Group estimated higher earnings.[/R]

Stocks pared gains in Tokyo trading after Bank of Japan left its asset purchase program intact and economy declined for the third quarter in a row.

Third Quarterly Shrink in GDP

The gross domestic product contracted at annual 0.4% rate in the quarter to December following a revised 3.8% decline in the previous three months, according to the latest data released by the Cabinet Office.

The previous quarter contraction was revised to 3.8% from the earlier estimate of 3.5%. In the latest quarter, exports declined at annual rate of 14% and imports fell 9% and international trade trimmed the GDP by 0.2 percentage point.

The private consumption increased at annual rate of 1.8% and residential construction soared at 14.7% annual rate.

BOJ Left Asset Program Intact

The central bank left its asset purchase program unrevised at 76 trillion yen, as expected by most economists. The central bank last month pledged to purchase unlimited program to purchase assets in 2014 to stimulate the economy.

The Nikkei 225 Stock Average increased 55.87 or 0.5% to 11,307.28 and the broader Topix Index slid 2.14 to 954.88.

Stocks in Review

Meiji Machine plunged 15% to 116 yen after the company was placed on a watch list with a possible delisting by the Japan Exchange Group on its failure to submit a quarterly report by the deadline.

Toyota Motor Corp. slipped 15 yen to 4,815 yen and Honda Motor Co. lowered 5 yen to 3,510 yen and Nissan Motor Co Ltd decreased 17 yen to 933 yen. Mazda Motor Corp slumped 10 yen to 273 yen.

Nippon Steel fell 8 yen to 257 yen and JFE Holdings Inc declined 38 yen to 2,056 yen. Daikin Industries slipped 25 yen to 3,455 yen.

Fujitsu Ltd up 1 yen to 417 yen and Sony gained 34 yen to 1,338. Canon Inc increased 55 yen to 3,315 yen and Nikon rose 16 yen to 2,095 yen. TDK Corp added 40 yen to 3,315 yen.

Nintendo Co. Ltd declined 90 yen to 8,620 yen and Pioneer Corp. climbed 8 yen to 209 yen.

Fanuc Corp. jumped 200 yen to 15,010 yen and Komatsu Ltd rose 9 yen to 2,417 yen. Hitachi Construction Machinery Co increased 21 yen to 2,157 yen.

Asahi Group Holdings increased 6% after the brewer said net income in the current fiscal year is expected to increase to 65.5 billion yen. The company also said it plans to buy back as many as 30 billion shares.

Asahi Glass fell 3 yen to 636 yen. Softbank Corp slipped 10 yen to 3,460 yen.

Nippon Prologis REIT Inc soared 24% to 682,000 yen on its first day of trading on the expectations that demand for warehouses is rising in Japan.

FamilyMart Co Ltd, the convenience chain operator increased 55 yen to 3,820 yen and Lawson jumped 40 yen to 6,820 yen. Ito En Ltd climbed 36 yen to 1,793 yen.

Seven & I Holdings Co fell 2 yen to 2,795 yen. Fast Retailing Co. gained 230 yen to 24,910 yen and J. Front Retailing Co. Ltd closed unchanged at 526 yen.

Mitsubishi UFJ Financial Group slid 10 yen to 523 yen and Sumitomo Mitsui Financial Group dropped 45 yen to 3,760 yen. Dai-Ichi Life fell 0.7% to 134,300 yen. Nomura Holdings, Inc lowered 1 yen to 539 yen.

Takeda Pharmaceutical Co rose 15 yen to 4,690.

Mitsui O.S.K. Lines, Ltd closed unchanged at 306 yen and Nippon Yusen K.K. gained 5 yen to 221 yen. Kawasaki Kisen Kaisha Ltd up 3 yen to 187 yen