Nikkei Plunges 2.1% on Weak Manufacturing Growth Trends in China

Hiruki Nakamura
02 Nov, 2015
New York City

Nikkei average in Tokyo dropped 2.1% and iron and steel sector led the decliners after two manufacturing surveys in China showed the sector remains in the contraction phase. Nissan Motor said first-half sales increased 15% and net soared 37%. LIXIL estimated annual net sales to increased 11%.

[R]4:30 PM Tokyo – Nikkei average in Tokyo dropped more than 2% and iron and steel sector led the decliners after two manufacturing surveys in China showed the sector remains in the contraction phase. Nissan Motor said first-half sales increased 15% and net soared 37%. LIXIL estimated annual net sales to increased 11%.[/R]

Stocks in Tokyo fell sharply after two manufacturing surveys showed China’s economic growth may falter despite a number of stimulus measures.

The private survey which includes more number of smaller companies conducted by Markit Economics showed purchasing managers’ index rebounded from a six-and-a-half-year low in September of 47.2 to 48.3 in October.

The reading below suggests that the growth rate is still contracting but the latest reading is a significant departure from the downward trend in place since the beginning of the year.

The government survey reported by the National Bureau of Statistics over the weekend said that the PMI, which has a higher weight to large state controlled enterprises, remained in the contraction phase with a reading of 49.8 in October.

Iron and steel sector stocks led the decliners in Tokyo trading with Kobe Steel Ltd plunging as much as 7%. Nippon Steel and Sumitomo Metals also declined more than 5% after trimming production outlook for the rest of the fiscal year.

The Nikkei 225 Stock Average declined 399.86 or 2.1% to 18,683.24 and the broader Topix index slumped 31.23 or 2% to 1,526.97.

The yen strengthened to 120.59 against a dollar.

Stocks in Review

Ashikaga Holdings Co Ltd fell 1.7% to 536 yen after the financial services provider and regional lender Joyo Bank Ltd agreed to merge to create the country''s third-largest lender with combined assets of about 15.2 trillion yen or $126.3 billion.

The share swap is expected to be completed in October 2016 and Joyo Bank will be delist on September 28, 2016 the bank said.

Brother Industries Ltd decreased 2.6% to 1,518 yen after the office equipment maker net sales in the first-half ending in September jumped 14.3% from a year ago to 371.07 billion yen.

Net income in the period plunged 64% to 13.36 billion yen compared to 37.12 billion yen and diluted earnings per share declined to 51.34 yen from 141.09 yen.

The company estimated net sales for the year to soar 13.1% to 800 billion yen and net income of about 121.33 billion yen.

Nissan Motor Co Ltd dropped 2.1% to 1,240 yen after the auto maker reported net sales in the first-half ending in September soared 15.3% from a year ago to 5.93 trillion yen.

Net income in the period surged 37.4% to 325.59 billion yen compared to 237 billion yen and earnings per share jumped to 77.66 yen from 56.54 yen.

The auto maker estimated net sales for the year to jump 7.7% to 12.25 trillion yen and net income to advance 16.9% to 535 billion yen.

LIXIL Group Corp jumped 3.6% to 2,695 yen after the sanitary equipment maker said net sales in the first-half ending in September jumped 10.2% from a year ago to 877.42 billion yen.

Net in the period swung to a loss of 22.88 billion yen compared to profit of 3.42 billion yen and diluted loss per share swung to 79.88 yen from diluted earnings per share of 11.68 yen.

LIXIL estimated net sales for the year to surge 10.9% to 1.86 trillion yen and net income to tumble 77.3% to 5 billion yen.

Teijin Ltd slumped 2.1% to 421 yen after the aramid, carbon and polyester products maker stated net sales in the first-half ending in September increased 3.9% from a year ago to 392.06 billion yen.

Net in the period swung to profit 24.46 billion yen compared to a loss of 22.35 billion yen and diluted earnings per share swung to 22.58 yen from diluted loss per share of 22.74 yen.

The textiles and apparels products maker estimated net sales for the year to increase 0.5% to 790 billion yen and net income of about 34 billion yen.

Ube Industries, Ltd plunged 4.7% to 243 yen after the chemicals manufacturer reported net sales in the first-half ending in September surged 15.5% from a year ago to 323.2 billion yen.

Net income in the period soared to 13.07 billion yen compared to 0.1 billion yen and diluted earnings per share jumped to 12.96 yen from 0.04 yen.