Abe's Speech Accelerated Steady Erosion in Japanese Stocks

Hiruki Nakamura
05 Jun, 2013
New York City

Stocks in Tokyo closed lower in volatile trading as foreign investors began unwinding yen hedge. The year-to-date gain of 30% in the Nikkei index is cut to 10% after adjusting for the yen weakness.

[R]5:30 PM Tokyo – Stocks in Tokyo closed lower in volatile trading as foreign investors began unwinding yen hedge. The year-to-date gain of 30% in the Nikkei index is cut to 10% after adjusting for the yen weakness.[/R]

Japanese stocks closed lower but indexes surged as much as 1.2% after Prime Minister Shinzo Abe began his speech in the afternoon.

The Nikkei 225 Stock Average declined 518.89 or 3.8% to 13,014.87 and Topix index dropped 35.44 or 3.2% to 1,090.03.

The yen strengthened to as high as 100.48 but closed at 99.59 against one dollar in today’s trading.

Investors took a cautious view as prime minister outlined his plan for growth and revive the economy and offered the “third arrow” of his three-arrow plan.

The steady erosion in market indexes was accelerated today after Prime Minister Abe failed to offer specific policy steps at a widely anticipated speech.

Abe focused on the hyper easing of monetary policy and escalating government spending in the first two arrows and in the third arrow proposed to liberalize the economy and attract investment in the energy, infrastructure and health sectors.

In today’s speech, Prime Minister Abe focused on structural reforms but also laid out a timetable of implementation in eight months and delayed most of the difficult decisions after the upper house election next month.

Stocks in Review

Toyota Motor Corp dropped 200 yen to 5,730 yen and Honda Motor Co. slipped 95 yen to 3,670 yen and Nissan Motor Co Ltd declined 42 yen to 1,057 yen.

Sony plummeted 101 yen or 5% to 1,908. Canon Inc slumped 150 yen to 3,305 yen and Nikon plunged 132 yen or 5.1% to 2,467 yen.

Fanuc Corp dropped 560 yen to 14,220 yen Softbank Corp slid 10 yen to 5,110 yen.

Seven & I Holdings Co decreased 105 yen to 3,410 yen. Fast Retailing Co. tumbled 3,130 yen or 9.5% to 29,920 yen.

Mitsubishi UFJ Financial Group dropped 26 yen to 579 yen and Sumitomo Mitsui Financial Group slipped 125 yen to 4,060 yen.

Daiwa Securities Group Inc. plummeted 65 yen or 7.6% to 790 yen and said in a letter to shareholders that it doubled compensation for its top executives last fiscal year.

Nomura Holdings plunged 7.5% to 719 yen after the largest broker said it resumed paying cash bonuses on a profit surge.

Dentsu Inc. gained 80 yen or 2.5% to 3,290 and the advertising company secured Asian broadcast rights to all the games of the World Cup in 2014.

Tokyo Electric Power Company, Inc tumbled 100 yen or 16.3% to 513 yen after Prime Minister Shinzo Abe in a speech failed to mention restarting the nation’s nuclear plants.