Lower July Capex Hurt Tokyo Trading

123jump.com Staff
03 Sep, 2007
New York City

Tokyo stocks fell in cautious trading on thin volume. Financials and real estate stocks led the decliners. Agriculture Minister Endo resigned after media reports suggested that the cooperative that he headed, reported higher claims of weather damages to receive larger subisidies. The newly appointed cabinet ministers were supposed to lift Prime Minister Abe from recent defeat in election. Renault and Nissan are planning to spend $1.2 billion to set up manufacturing plant in Morocco.

[R]7:00AM New York, 8:00PM Tokyo-Japanese shares fell after weak company expenditure data drew out investor confidence. Tax collection in Japan jumped 34% in July. Sony plans to list its subsidiary on Tokyo Stock Exchange in October.[/R]

Japanese stocks edged lower dragged by weak companies’ spending statistics. Tokyo lost 0.3% in mixed trading, shedding off gains of 2.6% reported Friday. Of the 225 Nikkei stocks 129 ended down, 88 gained while 8 remained unchanged. Nearly 2 trillion yen worth of shares changed hands. Of the index shares, 23 gained over 2%.

In Tokyo trading Nikkei 225 shed 0.27% or 44.16 to 16,254.93 after Finance Ministry data showed Monday capital spending by Japanese firms between April and June fell 5% from a year ago. The Ministry said manufacturers spent 12% more on plant and equipment in the last 12 months. Non-manufacturers spent 13.1% less during the review period. In the second quarter the aggregate corporate pre-tax profits rose 12%, those for manufacturers and non-producers increased 17.3% and 8% respectively.

The companies’ data also weakened the yen to 115.97 to one dollar, down from around 115.77 in the morning trade, pushing exporters marginally higher.

Japanese Finance Ministry reported that tax revenue expanded 34% in July to 4.7 trillion yen from a year earlier while income tax revenue jumped 76% to 2.8 trillion yen. Corporate tax revenues fell 38.2% to 120.38 billion yen, while consumption tax revenues lifted up 2.3% to 906.81 billion yen. Last week, Japan proposed raising consumption tax to cover social expenses. The ministry attributed to the rise in revenue to a relatively low base a year ago. The central government then had transferred large chunk of tax collected to local authorities to improve the regional economies.

Of the Nikkei 225 stocks, industrial shares gained. Yokohama Rubber ended up 5.3% followed by Mitsubishi Materials rallying 4.04%. Mitsubishi Rajon Co closed up 3.7% while Furukawa Electrical added 3.6% and Isetan up 3.5%. Technology stocks, financial and electrical shares gained.

Of the index stocks, Resona Holdings led the decliners with a loss of 3.7% followed by declines in Shinsei Bank Ltd of 3.10%, and 2.8% in Sumitomo Trust and Banking Ltd. KAO Corp and Mitsui Chemicals ease 2.74% and 2.7% respectively. Financials, Softbank Corp, Credit Saison Co, Shizuoka Bank, Chiba Bank Ltd and Mizuho Trust & Banking Co dropped over 1% each.

Sony Corp ended up 0.4% after Japanese media reported Monday that the technology group in October is planning to list Sony Financial Holdings Inc, on the Tokyo Stock Exchange''s First Section. The company plans to offer 30% to public shareholders in the estimated around 300 billion yen.


French automaker Renault SA and Nissan Motor Co group said Saturday that they plan to construct an automobile manufacturing plant in Morocco with an annual capacity of 400,000 vehicles. The joint venture plans to invest nearly $1.2 billion.

Morocco''s Prime Minister Driss Jettou and President and chief executive officer of Renault and Nissan, Carlos Ghosn, signed a memorandum of understanding Saturday for the creation of a new industrial complex in the Tangier region of North Morocco, the group said in a press release. Nissan Motor Co closed down 0.2% in Tokyo.