Tokyo Recovers on Machinery Orders

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

Stock in Tokyo recovered as buyers returned for energy, trading, and property stocks. Nikkei 225 index gained 0.7%. Of the stocks in index, 146 gained and 73 fell. Machinery orders jumped 17% in August, reflecting rising capital spending plans from businesses. Various ministries have submitted a budget for the next fiscal year totaling 7.3% increase. Japan Post will be provatized and split into four companies on October 1st.

[R]7:00AM New York, 8:00PM Tokyo - Property stocks lead marginal Japanese rebound. Japan machinery orders jump 17% in August. Ministries want 88.9 trillion yen for 2008 budget.[/R]

Stocks in Tokyo recovered from Monday losses on increased buying in real estate sector. Japan closed up 0.71% ending a six-day losing streak that peaked with a loss of 2.22% yesterday. Of the 225 stocks in the index, 146 stocks gained, 73 fell and 6 traded unchanged. Of the index shares, 41 stocks gained between 2% and 6.5%.

In Tokyo trading Nikkei 225 moved up 0.71% or 112.7 to 15,877.67, as bargain hunters returned for property shares that had fallen sharply in recent days.

Government announced Tuesday Japan’s core private sector-machinery orders surged 17% in August, the biggest climb in four years. The orders are considered a leading indicator of corporate capital expenditure. The highest surged stood at 17.2% in October 2003.

Finance Minister Fukushiro Nukaga said today ministries had made submissions of up to 88.9 trillion for fiscal 2008 budget, which is 7.3% higher than what government had budgeted for fiscal year 2007. Of the cumulative figure, 50.5 trillion yen relates to core policy outlays versus a spending limit of 47.4 trillion yen set by Cabinet for 2008 budget. At least 22.2 trillion yen was requested for debt servicing while that for domestic tax grants stood at 16.2 trillion yen. Nukaga said Tuesday: ""We need to cut around 3 trillion yen to curb the total budget within the upper limit.""

Japan media reported that the government was evaluating the prospect of eliminating the corporate tax on dividend income from subsidiaries abroad to help spur local investment. The current tax system levies domestic corporate tax on income of overseas Japanese firms’ units.

Of the Nikkei 225 shares, real estate stocks gained most. Nippon Suisan led gainers surging 6.1% followed by oil producing firm, Inpex Holdings ending up 5%. Mitsubishi Estate Co lifted higher 4.3%, Nikon Corp rose 4.2% while Taiyo Yuden Co gained 4.18%. Property stocks Sumitomo Realty advanced 4.11% shedding yesterday’s losses, Tokyu Land Corp pushed up 3.9%. Heiwa Real Estate and Mitsui Fudosan gained 3.8% and 3.5% respectively.

In the index, pharmaceutical stocks fell. Hitachi Zosen paced decliners falling 4.5% followed by Sumitomo Osaka down 2.9% and Hino Motors lost 2.85%. Daiichi Pharmacy Co and Chugai Pharmacy Co dropped each 1.9%. Astellas Pharmacy fell 1.5%, Takeda Pharmaceutical shed 1.2% and Shin ETSU Chemicals eased 1.6%.

On Monday, Japanese government consented to the proposed privatization of the Japan Post Corp, the culmination of a 10-year privatization process to start effectively October 1. Under the process, Japan Post Corp will be split into four stock units-savings, insurance, mail and over-the counter services. The holding company with 26,000 ATMs would be de-activated by September 30 to pave way for privatization. All postal ATMs installed at post offices and other locations across Japan need to be suspended so as to confirm the amount of cash Japan Post holds on the last day as a public corporation, Japan Post has said. ATMs operated by financial institutions and convenience stores tied up with Japan Post will not be affected.