Financial Stocks Drop in Tokyo

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

Stocks in Tokyo fell after the worries of the sub-prime losses in the U.S. resurfaced. Banks and financial services led Nikkei 225 lower by 0.6%. September trade surplus rose 63% on 6.5% rise in exports and 3.25% decline in imports. Exports to China increased 16.5% and to India surged 54% but to the U.S. fell 9.2%. For the six months period ending in September, exports jumped 45.7% from a year ago.

[R]6:00 AM New York, 7:00PM Tokyo - Merrill Lynch loss weighs on financial stocks in Tokyo. Japan’s September trade surplus surged 62.7% to 1.64 trillion yen.[/R]

Japan stock index reversed morning gains to slump 0.56% on the news that U.S broker and investment banker Merrill Lynch was likely to report wider than estimated loss of $5 billion.

In Tokyo trading Nikkei 225 shed 0.56% or 92.19 to 16,358.39, while the broader Topix Index lost 0.4% to 1,563.86.

In the first section of the Tokyo Stock Exchange 7.9 billion shares worth one trillion yen were traded and 230 million shares valued at 5.3 billion changed hands in the second section.

Of the Nikkei 225 stocks, 71 gained, 150 declined, and 4 were unchanged. Sixty six stocks in the index lost 1% or more. Exporters retreated on firming yen, spurred by positive trade data. Sony Corp plunged 0.96%, Toshiba fell 2.56%, and Toyota Motor Corporation slipped 2.27%.

Ministry of Finance in Japan reported today that the overall shipments firmed in September to a record 41.8 trillion yen boosted by demand in Asia and Europe. Imports however declined 3.2% last month, the first time since February 2003, spurring trade surplus to climb 62.7% to a record 1.64 trillion yen from a year earlier.

Exports jumped 6.5% from a year ago in September compared to increase of 14.5% in August and less than 8.1% projected by analysts. Exports to the U.S. fell 9.2% as demand for construction equipment and automobiles declined.

Exports to China, Europe and Asia expanded at the slowest pace, with shipments to China increasing at 16.5% compared to 23.7% in August. Asian exports also rose 8.3% after firming 16.4% in the month earlier and shipments to Europe surged 13.2% against 15.5% in August.

Slowing export growth stocked expectations that Japan’s economic expansion may slow down as domestic consumer spending is still weak and declining. Japan’s GDP shrank by an annualized 1.2% in the second quarter. The IMF last week revised downwards its estimate of annual economic growth to 1.7% from 2%.

The yen continued to firm against the dollar, buoyed by the widening trade surplus and reports by Market News International that a National Development and Reform Commission report recommended that China should reduce the value of the yen by 20%. It was quoted at 114.27 to the dollar at the close of trade and 162.23 from 162.26 against the euro.

The Australian, news service in Australia, reported today that Kansai Electric Power Company is seeking to double its procurement of uranium in Australia. Kansai Electric Power Co executive vice president Mitsuyasu Iwata was attending this week’s 45th Japan-Australia Joint Business Conference in Tokyo. The company was tasked by the government with lifting nuclear share of Japanese power generation to 40%.

Of the Nikkei 225 index shares, Fast Retailing led gainers with a rise of 6.83% followed by gains in Chugai Pharmaceutical Company of 5.27%, in Sumitomo Chemical Company of 5.27%, in Mitsui Electric Company of 3.38%, and Clarion Company Limited of 3.11%.

Pharmaceutical companies gained after Chugai Pharmaceutical Company’s third quarter profit jumped 8.5% on increase sales of Tamiflu and Nuetrogen. Nikkei reports Takeda Pharmaceutical may post a 16% increase in operating profit in the year ending March 31 on increased sell of a diabetes drug in the U.S. Takeda closed up 1.13%.

Commodity related stocks rose on increasing metal prices. Copper edged up 0.5% and Zinc surged 1.1%. Nippon Mining House climbed 0.85% and Japan Steel Works gained 1.36%.

Shinsei Bank Limited led the decliners in the index with a loss of 6.76%, followed by losses of 5.15% in Daiichi Sankyo, of 5% in Kyowa Hakko Kgoya, 3.96% in Yokogawa Electric, and 3.87% in Toho Company Limited.

Financial stocks plunged after the New York Times reported that the U.S. broker Merrill Lynch & Company will probably add $2.5 billion of write-downs to $5 billion it disclosed earlier this month. Banks and financial services companies fell on the news. Mitsubishi UFJ Financial Group fell 0.76%, Mizuho Financial Group declined 1.45% and Sumitomo Mitsui Financial Group retreated 1.29%.

Bloomberg news reported today that mobile phone company KDDI Corp will miss its target of fixed line service customers by 140,000 users this year as customers are reluctant to pay a 34% premium for the network upgrade. The company had targeted 900, 000 users by March 2008 from the current 668,000.