Nikkei Plunges 3.1%, Record Current Account Deficit in Japan

Hiruki Nakamura
14 Jan, 2014
New York City

Nikkei index in Tokyo plunged 3.1% and the yen continued its slide after a 3-day market closure. Seasonally adjusted current account balance turned negative for the third month in a row in November. Investors extended purchase of dollar bonds for the fifth month in a row.

[R]4:30 PM Tokyo – Nikkei index in Tokyo plunged 3.1% and the yen continued its slide after a 3-day market closure. Seasonally adjusted current account balance turned negative for the third month in a row in November. Investors extended purchase of dollar bonds for the fifth month in a row.[/R]

Stocks in Tokyo fell sharply following a weakness in Asian markets and on the ongoing worries of stretched valuations.

Japan posted a record current account deficit which widened to 592.8 billion yen or $5.74 billion in November. The deficit was record high since data keeping began in 1985.

Seasonally adjusted current account remained in red for the third consecutive month and the deficit was larger than the median estimate of 380.4 billion yen.

The trade deficit in November widened to 1.25 trillion yen, according to current account data released by the finance ministry today.

The income surplus stood at 900.2 billion yen and the yen declined about 17% from a year ago as the Bank of Japan ramped up purchases of government debt under expanded quantitative easing.

The Nikkei 225 Stock Average declined 489.66 or 3.1% to 15,422.40 and the Topix index dropped 29.40 or 2.3% to 1,269.08.

The yen closed fell at 103.47 against the U.S. dollar.

Money managers in Japan increased net purchase of dollar bonds to 1.48 trillion yen in November, a separate report form the Finance Ministry noted today.

The bond purchase increase in five-month period was the longest duration in the last 40 months.

Stocks in Review

Toyota Motor Corp slumped 146 yen to 6,144 yen. Honda Motor Co slipped 150 yen or 3.5% to 4,115 yen. Nissan Motor Co Ltd slid 4 yen to 938 yen.

Sony dropped 42 yen to 1,793 yen and electronic products maker is in talks with the Microsoft to roll out a Windows Phone.

Softbank Corp declined 279 yen or 3.1% to 8,741 yen.

Fast Retailing Co plunged 2,085 yen or 5.1% to 39,015 yen and retailers Uniqlo USA plans to open five new stores in the next six months in the U.S.

In the fall of 2014, the retailer plans to debut its high-quality clothing in new markets including Philadelphia, Boston and Los Angeles.

Chubu Electric Power Company Inc dropped 2.5% to 1,270 yen after the electricity provider signed a sales and purchase agreement with Australia-based Woodside Petroleum Limited for the supply of 1.5 million tons of liquefied natural gas for a three-year period commencing from April 2014.

DIP Corporation surged 18.1% to 1,485 yen after Japan-based employment agency raised its dividend payout to 23 yen per share for the year ending in February.

Panasonic Corporation fell 1.4% to 1,319 and Mozilla agreed to form a partnership to develop new Firefox OS, open platform based on HTML5 and other Web technologies for next generation of “smart TV.”