Tokyo Down 2.2%, Shrinking Economy

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

Nikkei 225 index in Tokyo fell 2.2% on weak Friday closing in the U.S.and shrinking domestic economy. In the second quarter, Japan recorded annualized negative economic growth of 1.2% on lower than expected capital spending and declining public investment. Initial government estimate was 0.5% economic grwoth in the second quarter. Consumer spedning rose 0.3%, lower than 0.4% initially estimated. The Economy Watchers Index fell in August, fifth monthly decline in a row.

[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks opened week in the red after economy shrank 1.2% in second quarter. Tokyo banks’ lending rises 0.5% in August. Yen rallies most in a fortnight.[/R]

Japanese stocks fell sharply Monday pulled back by negative economic news at home and in the U.S. Tokyo added to the losses started last week, fell 2.2% today. Property and financial stocks dropped heaviest. Of the 225 Toko shares, 206 shares fell, only 13 gained and 6 remained unchanged. Of the index shares, 28 stocks dropped over 4%.

In Tokyo trading Nikkei 225 plunged 2.22% or 357.19 to 15,764.97 on increased selling pressure. Investors were jittery over a contracting economy in Japan and higher job losses in the U.S. Exporters dropped after yen rose to 113.10 against dollar from 113.38 Friday and over 115 beginning of last week. Analysts expect the yen to touch a high of 111 per dollar this week.

Japanese Government announced Monday the economy shrank an annualised 1.2% in the second quarter to June, lower than initial forecast of 0.5% growth. The contraction corresponds to a 0.3% drop from the first quarter and is the first negative economic growth since 2004 year-end quarter, measured in term of GDP.

The Bank of Japan reported today Japan’s money supply indicator increased 1.8% in August from a year ago. The average daily balance of M2 plus certificates of deposit came to 723.6 trillion yen. M2 consists of cash in circulation, demand deposits and quasi-money. The bank said again Monday the average daily balance of domestic bank lending rose 0.5% to 387.02 trillion yen in August from 12 months ago The loan balance, excluding loans by credit cooperatives, was adjusted for special factors — loan securitisation, exchange-rate fluctuations and the allocation of loan-loss reserves.

Real estate, financial and technology shares declined most in Tokyo. Of the Nikkei 225 stocks, Topy Industries Ltd paced decliners slumping 7.7% followed by Shimizu Corp that plunged 7.1%. Technology group, Sony Corp fell 6.03%, Okuma Corp down 5.8% and Resona Holdings lost 5.6%.

Of the Nikkei 225 index stocks, property shares Kajima Corp lost 5.44%, Heiwa Real Estate closed lower 5.34% while Tokyu Land Corp, Mitsui Fudosan, Sumitomo Realty and Mitsubishi Estate Co fell 4.7%, 4.67%, 4.5% and 3.8% respectively. Financials Mistubishi UFJ and Sojitz Corp dragged 4.93% apiece. Chiba Bank Ltd, Chiyoda Corp, Shizuoka Bank, Marubeni Corp lost over 3.5%. Industrial and steel companies dropped too.

Of the index shares, Nippon Suisan led gainers rising 4.8% followed by Daikin Industries up 4% and Mitsubishi Electric Corp added 3.6%. Kyowa Hakko KOG and Denki Kagaku ended up 2.4% and 2.3% respectively.