Nikkei Plunges 2.7%, Japan's Current Account Surplus Narrows

Hiruki Nakamura
12 Jan, 2016
New York City

Nikkei in Tokyo extended year-to-date losses and the yen advanced after the crude oil prices fell and stocks in Shanghai faced more downward volatility. Current account surplus narrowed in November. Aeon Co plunged nearly 10% after reporting a loss.

[R]4:30 PM Tokyo – Nikkei in Tokyo extended year-to-date losses and the yen advanced after the crude oil prices fell and stocks in Shanghai faced more downward volatility. Current account surplus narrowed in November. Aeon Co plunged nearly 10% after reporting a loss.[/R]

Stocks in Tokyo fell sharply and the Nikkei average dropped to a three-month low after investors returned after a holiday on Monday.

Oil prices continued to drift lower to an 11-year low and stocks in Shanghai struggled for the second week in a row and analysts forecasted more weakness in Tokyo trading and estimated yen to rise.

The current account surplus in November narrowed to 1,143.5 billion yen from 1,458.4 billion yen surplus in October, the Ministry of Finance said.

The trade balance in the month showed a deficit of 271.5 billion yen compared to 200.2 billion yen surplus in the previous month.

Exports in November declined 6.3% to 5.92 trillion yen while imports tumbled 10.9% to 6.19 trillion yen.

The total value of bank lending in December jumped 2.2% to 496.715 trillion yen and was unchanged from the November, the Bank of Japan reported.

The seasonally adjusted consumer confidence index in December increased 42.7 from 42.6 in the previous month, the Cabinet Office said.

The Nikkei 225 Stock Average dropped 479 or 2.7% to 17,218.96 and the broader Topix index dropped 45.37 or 3.1% to 1,401.95.

The yen gained against the U.S. dollar to 117.35.

Stocks in Review

The ANA Group, the largest airline group agreed to acquire approx 8.8% stake in the Vietnam Airlines for about US$108 million or 2,431 billion Vietnamese dong and the deal is expected to close between March and June.

JX Holdings, Inc dropped 2.3% to 38,140 yen after the petrochemical company reported net loss widened for the year ending in March to about 200 billion yen from earlier estimated loss of 80 billion yen, mainly due to valuation losses on inventories.

Mitsubishi Estate Co Ltd fell 1.7% to 2,307 yen after the real estate developer said sales in the third-quarter ending in December to jump 3% to 750 billion yen and pre-tax profit to soar 10% to 100 billion yen.

For the year, the company forested pre-tax profit to slump 6% to 125 billion yen.

OSG Corporation slumped 1.8% to 2,047 yen after the precision machine tools maker reported net sales in the year ending in November soared 10.8% from a year ago to 111.92 billion yen.

Net income in the period surged 25.3% to 12.52 billion yen compared to 9.99 billion yen and diluted earnings per share jumped to 120.25 yen from 95.96 yen in the same period a year ago.

For the first-half, the company forecasted net sales to gain 1.4% to 57 billion yen but net income to decline to 4.8% to 6.30 billion yen.

The company estimated net sales for the year to increase 4.5% to 117 billion yen and net income to soar to 11.8% to 14 billion yen.

SAN-A Co., Ltd decreased 0.9% to 5,100 yen after the apparel and food retailer said net sales in the nine-month ending in November jumped 5.2% from a year ago to 128.72 billion yen.

Net income in the period advanced 12.4% to 6.21 billion yen compared to 5.53 billion yen and earnings per share increased to 194.37 yen from 172.88 yen in the same period a year ago.

In the year, the clothing retailer forecasted net sales to increase 1.8% to 167.53 billion yen and net income to increase to 5.3% to 7.99 billion yen.