Miners Lead in Tokyo, Nomura Reports Loss

123jump.com Staff
15 Oct, 2007
New York City

Stocks in Tokyo closed higher after facing a morning trading decline. The Bank of Japan said in a quarterly regional economic report that export sector is expanding and capital investment is still rising moderately. The Bank of Japan governor said that the economy is likely to expand at a moderate pace. Rising prices of metals, agricultural commdities, and energy lifted stocks in shipbuidling and mining sectors. Mitsui Engineering anf Mitsui OSK gained more than 2%.

[R]6:00AM New York, 7:00PM Tokyo – Shipbuilders, trading houses, and mining and mineral companies led the gainers in Tokyo trading. Nomura reported a first quarterly loss in four years.[/R]

Stocks in Japan closed higher after dropping at the opening.

In Tokyo trading Nikkei 225 gained 0.16% or 26.98 to 17,358.15, while the broader Topix Index slipped 0.12% to 1,657.44. Of the Nikkei 225 stocks 107 gained, 97 fell and 21 were unchanged. Advantest Corporation led the gainers with a rise of 6.35%.

In the first section of the Tokyo Stock Exchange 7.6 billion shares valued at 1.05 trillion yen were traded and 539 million shares valued at 6.8 billion shares traded in the second section.

The Bank of Japan governor Toshihiko Fukui said today that Japan’s economy would continue expanding moderately buoyed by export shipments and corporate investment. Fukui added that the bank will closely monitor developments in the global financial and credit markets.

Economists are still looking for a moderate economic expansion in the second half the year as companies in Japan increase industrial production by 3.4% and household spending, though weak, increased at 1.6%.

Bank of Japan Regional Economic Report released today after the quarterly meeting of the nine regional branch managers of the Bank of Japan noted that the export sector is expanding and business fixed investment was rising in all regions.

According to the report, private consumption was steady with rising employment and household income on the upside. However, housing investment has plummeted as enforcement of the Building Standard Law had prompted a delay in housing starts.

Kanto-Koshinetsu, Tokai and Kinki and Hokuriku regions said economic activity was expanding gradually.

The Nikkei newspaper reported today that Mitsui Mining & Smelting Co and Nippon Mining & Metal Co. will spend 200 billion yen to develop the largest non-ferrous metal mining project in copper mines in Chile and Peru through 2011. The largest investment by a Japanese company in the region will help Japanese companies to secure a stable supply of copper and other non ferrous metals.

Separately, Gold Japan crossed the 3,000-yen per gram mark for the first time in 23 years, soaring to 3,003 yen per gram.

Of the Nikkei 225 index shares Advantest Corp led the gainers with a rise of 6.35%, followed by gains of 4.71% in Sanyo Electric, 4.69% in Sapporo Holdings, 4.71% in Mitsui Mining & Smelting Company and 3.76% in Fuji Electric.

Tokyo Electron gained as well after a brokerage raised its price estimate and Advantest jumped on the expectations of improved climate for tech spending.

Shinsei Bank Limited led the decliners in the index shares with a fall of 5.54%, followed by losses of 3.68% in Mitsubishi UFJ Financial Group, 2.62% in TDK, 2.20% in Clarion Company Limited and 2.09% in Hitachi Zosen.

Shipbuilders rose as well on firming freight charges and reports that the freight derivatives market is set to hit a record $150 billion in value, a 200% increase from last year. Freight charges are being driven largely by shipments of raw materials to China. Mitsui Engineering & Shipbuilding Company gained 2.43% while Mitsui O.S.K. jumped 2.12%.

Financial stocks declined on the worries that subprime lending losses to the U.S. borrowers are likely to hurt profitability. Mizuho Financial Group shed 1.77% and Sumitomo Mitsui Financial Group slipped 0.65%.

Nomura Holdings Inc said today it will exit the U.S. residential mortgage-based securities and cut its workforce in the U.S. by 31% from 1,300 to 900. Restructuring charges and losses from its residential-based securities will result in a group pre-tax loss of between 40 and 60 billion yen for the July and September period.

Nomura, according to the statement filed with the Tokyo Stock Exchange will take a charge of 73 billion due the U.S. mortgage securities and an additional charge of 15 billion to eliminate 31% of the staff.

Nomura fell 10 yen at the close of trading to 2,080 yen.

The yen traded at 117.64 from 117.65 to the dollar and was quoted at 167.38 from 167.39 against the euro.



The regional economic review from the Bank of Japan as published on the web site. The link to the page on the bank’s site is:

http://www.boj.or.jp/en/type/ronbun/chiiki_rep/chiiki0710.htm

October 15, 2007
Bank of Japan

According to reports from each of the nine regions in Japan, the economy as a whole expanded moderately as most regions remained on an expansion or recovery trend, although there were regional differences.

Specifically, the corporate sector remained buoyant as exports continued to increase, business fixed investment continued to be on an increasing trend in all regions, and business sentiment remained generally favorable although it had become somewhat cautious. In the household sector, private consumption was steady, with employment and household income on an increasing trend. Housing investment, however, had dropped recently in all regions, mainly due to the delay in construction starts affected by the enforcement of the revised Building Standard Law. Against the background of the increase in domestic and external demand, production was on an increasing trend.

Assessments showed that regional differences remained: Kanto-Koshinetsu, Tokai, and Kinki described their economic activity as expanding, while the other regions described it as being on a recovery trend or flat.

Compared with the assessment in July 2007, at the time of the last branch managers'' meeting, six out of nine regions maintained their previous assessment. Hokkaido, Kinki, and Kyushu-Okinawa revised their assessments slightly downward: Hokkaido indicated a standstill in the recovery of production; Kinki reported a decrease in housing investment and a slight deceleration of growth in private consumption; and Kyushu-Okinawa pointed out a decrease in housing investment and the emergence of some cautiousness in business sentiment, mainly in manufacturing.