Tokyo Declined 2%, Machinery Orders Fell

123jump.com Staff
08 Nov, 2007
New York City

Tokyo stocks fell 2% as more losses were reported in the U.S. on sub-prime lending. Nikkei 225 index fell sharply on the worries that the widening losses in the mortgage securties is increasingly likely to slow down the U.S. economy and slow the earnings growth of the Japanese companies. Yen rose against dollar. Kirin agreed to acquire Natioal Foods based in Australia. September machinery orders declined 7.6%.

[R]6:00AM New York, 7:00PM Tokyo - Exporters, financial stocks drag Tokyo down 2% on weakening dollar and heightening concern over credit market losses. Machinery orders decline 7.6% in September.[/R]

In Tokyo trading Nikkei 225 declined 2.02% or 325.11 to 15,771.57, while the broader Topix Index fell 39.75 to 1,516.94.

Of the Nikkei 225 stocks, 20 gained, 202 shed, and 3 were unchanged. Chiyoda Corp led the decliners in the index falling 14.1%, followed by losses in Nippon Mining House of 13.94% on a sharp decline in profit of 30%.

In the first section of the Tokyo Stock Exchange 10.9 billion shares valued at 1.3 trillion yesterday compared to 8.5 billion yen worth 1 trillion traded yesterday and in the second section 339 billion shares valued at 6.2 billion changed hands.

The Cabinet Office’s Economic and Social Research Institute announced today the total orders received by 280 manufacturers operating in Japan slumped by a seasonally adjusted 14.5% to 2.37 trillion yen in September from August and in the fiscal second quarter ending in September 2007 orders fell 3.6% or 7.7 trillion yen compared to the previous quarter ending in June 2007.

Private sector machinery orders, excluding volatile orders from shipping and electrical power utilities, fell a seasonally adjusted 7.6% or 958 billion yen, but increased 2.5% to 3.1 trillion yen in the quarter ending in September.

According to the report, total manufacturing machinery orders increased 5.7% in September at 473 billion yen and added 2.7% in the quarter ending in September to 1.41 trillion yen. Orders are forecasted to increase 5.9% in the three months to December to 1.49 trillion yen. For non-manufacturing companies, excluding volatile orders, September orders fell 14.1% to 487 billion yen, while orders in the quarter ending in September rose 1.6% to 1.71 trillion yen and in the quarter to December orders are expected to rise 1.1% to 1.73 trillion yen.

The Cabinet Office also reported government orders in September slumped 18.6% to 198 billion yen, while in the quarter ending in September, orders fell 26.2% to 670 billion yen and are projected to increase 19.1% to 798 billion yen in the quarter to December. In addition, overseas orders plunged 7.8% in September to 1.1 trillion yen and 2.2% or 3.3 trillion-yen in the July-September quarter, but orders are forecasted to grow 4.8% to 3.4 trillion yen in the quarter ending in December.

Of the Nikkei 225 index shares, Alps Electric Company Limited paced gainers rising 2.96%, followed by gains of 2.34% in Konami Corp, 2.17% in Shinsei Bank Limited, 2.14% in Nippon Paper Group and 1.75% in Olympus Corporation.

Chiyoda Corp led decliners, slumping 14.09%, followed by losses in Nippon Mining House of 13.94%, in Dainippon Sumitomo of 8.73%, in Kubota Corp of 7.26% and Pioneer Corp of 7.11%.

Financial stocks declined, weighed down by losses declared in sub-prime portfolio of the U.S. securities firm Morgan Stanley and weak earnings from General Motors and AIG.

Morgan Stanley wrote down its portfolio by $3.7 billion. Separately, American International Group reported third quarter earnings plummeted 27%. General Motors Corp also announced a $39 billion quarterly loss, worst quarterly loss ever.

Mitsubishi UFJ Financial Group slipped 3.21%, Mizuho Financial Group, slumped 3.43% and Sumitomo Mitsui Financial Group fell 2.92%.

The yen firmed against weak dollar at 112.52 from 112.54 against the dollar. Exporters fell on weak dollar led by a loss in Sony Corp of 2.36%. Toyota Motor slipped 4.19% but Honda Motor climbed down 2.91%.

Brewer Kirin Holdings announced has agreed to acquire National Foods, Melbourne, Australia based dairy and fruit juice unit owned by San Miguel Corporation, for 294 billion yen, inclusive of a 200 billion yen debt.

National Foods, with 19 plants located in Australia of the total of 24 plants it owns, sells dairy products branded Pura Milk, Beri juices, King Island Dairy, Farmers Union and has Australian rights to Yoplait yoghurt.

National Foods generated revenue of A$1.84 billion and generated A$0.17 billion in the fiscal year 2006 ending in December and employs 3,500 people.

Kirin is trying to diversify its reliance from beer sales as younger population is increasingly opting for healthier alternative to beer. Kirin Holdings revised downwards its full year profit first year profit forecast by 3.6% to 54 billion yen.