Japan Dissolves Parliament; Stocks Surge

Mayank Mehta
21 Jul, 2009
New York City

Stocks in Japan surged on the back of a rally in New York. Metals, shipping and trading companies stocks closed higher. Convenience stores sales in June decreased for the first time in fourteen months. Prime Minister Taro Aso dissolved the parliament for the election scheduled on August 30.

[R]7:00 PM Tokyo, 5:00 AM New York – Stocks in Japan surged on the back of a rally in New York. Metals, shipping and trading companies stocks closed higher. Convenience stores sales in June decreased for the first time in fourteen months.[/R]

The race for the next election started with the lower house of parliament was dissolved by Prime Minister Taro Aso. The opposition party Democratic Party of Japan may gain control of the house as it has controlled the upper house since 2007.

The DPJ has proposed to trim ‘wasteful’ government spending and provide more cash in the hands of consumer. The party hopes that higher subsidies for child care, lower petrol taxes at the pumps and canceling tolls on highways will help consumer spending.

The elections are scheduled on August 30.

Stocks in Tokyo trading gained on the rise in New York and on the hope that better than expected earnings will continue this season.

The Nikkei 225 Index in Tokyo closed higher 256.70 or 2.73% to 9,652.02

Gainers & Losers

The global rally in commodities lifted stocks in resources and shipping sectors.

Nippon Mining Holdings Inc increased 4.8% to 477 yen and Kawasaki Kisen edged up 0.8% to 363 yen.

Exporters closed higher. Cannon Inc increased 3.6% to 3,200 yen, Casio Computer increased 3.8% to 730 yen and Citizen Holdings added 3.3% to 463 yen and Nikon Corp added 6.2% to 1,658 yen.

Hitachi Limited added 2.5% and Hitachi Construction Machinery increased 9.5% and Kawasaki Heavy Industry surged 8% to 245 yen after Caterpillar indicated optimistic outlook. KBC Groep NV also recommended the Hitachi Construction stock.

Nippon Steel added 4.8% to 352 yen, JFE Holdings Inc surged 6.9% to 3,110 yen and Japan Steel Works soared 7.2% to 1,238 yen after metals close higher in London and in New York.

Isetan Mitsukoshi increased 5.3% to 926 yen and J Front retailing added 7.1% to 496 yen.

Convenience store sales in June declined 2.3% from a year ago to 605.9 billion yen, first monthly decline in fourteen months. Average spending per customer fell 4.8% to 556.9 yen but customer traffic increased 2.3% at the fifteen companies participating in the survey.

Kawasaki Heavy Industry surged 8% to 245 yen.

The rise in commodities raised the trading companies stocks. Marubeni Corp added 5.7% to 427 yen, Mitsui & Company increased 4.9% to 1,147 yen and Mitsubishi Corp added 5.5% to 1,793 yen.

Mitsubishi Chemical Holdings increased 8.1% to 413 yen after Bank of America Merrill Lynch recommended the stock with ‘buy’ rating.

Nikkei 200 Average Movers

Shinsei Bank Limited led the decliners in the Nikkei 225 index of 3.1% followed by losses in Tokyu Corp of 2.0%, in All Nippon Airways Co. Ltd of 1.8%, in Japan Tobacco Inc of 1.4% and in Japan Airlines Corp of 1.2%.

Meidensha Corp led gainers in the Nikkei 225 index with a rise of 14.7% followed by gains in Sumitomo Heavy Industries Ltd of 10.2%, in GS Yuasa Corporation of 9.6% and Hitachi Construction Machinery Co Ltd of 9.4%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 256.70 or 2.73% to 9,652.02, Hang Seng index in Hong Kong decreased 0.64 or 0.00% to 19,501.73 and CSI 300 index in China lower 51.29 or 1.43% to 3,539.83. ASX 200 index in Australia increased 0.40 or 0.01% to 4,050.70. The FTSE Bursa KL Composite index in Malaysia closed lower 4.55 or 0.40% to 1,134.70.

The Kospi Index in South Korea increased 10.48 or 0.71% to close at 1,488.99. SET index in Thailand closed lower 3.84 or 0.63% to 609.83 and JSE Index in Indonesia increased 40.20 or 1.91% to 2,146.55. The Sensex index in India decreased 128.52 or 0.85% to 15,062.49.