Lower DRAM Prices Drag Tokyo Stocks

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

Nikkei 225 index edged up a fraction as weakness in consumer lenders and tech stocks closed lower. Land prices in Japan rose 1%, a first rise in sixteen years, and decline in residential prices slowed to 0.7% from 2.3%. The manufacturing survey indeicated that manufacturing companies plan to increase capital investment by 6.3%. Rising metal prices lifted stocks of metal trading companies. Japan steel production gained 3.7%.

[R]6:00AM New York, 7:00PM Tokyo, Japanese stocks closed up 0.2%. Commodity- related stocks and Real Estate however rallied buoyed by rising metals prices. Japan commercial land prices gains 1% and manufacturing companies to boost capital spending by 6.3%.[/R]

Japanese stocks were largely tepid as losses in technology stocks sparked by 10% fall in DRAM chips weighed on chipmakers. However, commodity related stocks and realty developers gained on rising metal prices and strengthening land prices. Of the Nikkei 225 index 131 stocks advanced, 84 slumped and 10 traded unchanged. Nikkei 225 Index edged up 32 points to close at 16,413.79.

The Ministry of Land Infrastructure and Transport says Japans commercial land prices firmed for the first time since 1991 by 1%. Decline in nationwide residential land prices slowed to 0.7% from 2.3%.

The Cabinet Office and Ministry of Finance survey released today shows that sentiment among manufacturers with one billion yen worth of capital soared 7.7 points this quarter, compared to a loss of 2.2. The gain in confidence was a significant reversal of the pessimism that characterized business in the second quarter. Japanese companies are also planning to increase capital spending, especially on equipment and factories by 6.3% and overall companies from all sectors are likely to increase investment by 1.5%.

Japan Iron and Steel Federation says the August production of crude steel increased for the fifteen month with an increase of 3.7% compared to a year ago to 9.97 million metric tons driven mainly by rising global demand.

Realty developer Mitsui Sumitomo led the rising stocks in the index with a gain of 5.62% on firming land prices, followed by mineral resources company Sojitz Corp, climbing 25 or 5.49%. Hitachi Zosen soared 5.26%, while Marubeni Corporation added 5.21%. Japan Steel Work jumped 4.61% propped up by metal prices.

Metal prices upward spiral, driven mainly by demand from emerging economies, especially China, continues, as copper added 4%, while nickel recorded the biggest rise in three years to 9.9%. Zinc gained 5.1%.

Consumer lender Mitsubishi UFJ led the index decliners with a loss of 13.41% on speculation that falling consumer spending will hurt earnings and reports that the financial institution expects a 100 billion loss this year. Chipmakers Tokyo Electron and Adventist Corp, the world’s biggest memory –chip-testing equipment shed 4.92% and 4.65% respectively. Chubu Electric Power lost 4.49% and Sumitomo Trust retreated 4.48%.

Concerns of declining consumer spending also took their toll on consumer lenders providing unsecured lending such as Aiful, Acom and Promise.

Bloomberg news service reported that according to an analyst at DRAMeXchange, Asia’s largest computer memory chip market, memory prices will drop 10% between $16 and $17 in the first half of this month. Elpida, the largest memory maker, fell 6% and chip makers Advantest and Tokyo Electron declined 5%.