Tokyo Declines, China Orders Lending Freeze

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

Stocks in Tokyo fell on the first day of this week. Nikkei 225 index fell 0.7% to close at 15,042. Twenty One financial institutions are in an alliance to acquire Ashikaga Bank from the government of Japan. Shizuoka Bank led the gainers in the Nikkei 225 index and Tosho Corp led the decliners. Yen edged higher.

[R]5:00AM New York, 7:00PM Tokyo- Tokyo retreats 0.74% on stronger yen. Prime Minister Yasuo Fukuda says subprime crisis has not had a major impact on economy.[/R]

In Tokyo trading Nikkei 225 retreated from a 0.3% advance by mid-day to close down 0.74% or 112.05 to 15,042.56 and Topix Index fell 15.06 to 1,456.61.

In the first section of the Tokyo Stock Exchange 7.6 billions shares worth 917 billion yen were traded and 255 million shares valued at 4.1 billion yen changed hands in the second section.

Of the Nikkei 225 stocks 72 gained, 142 declined, and 9 were unchanged. Shizuoka Bank Limited led advancers with a gain of 4.60% after Resona Holdings lifted its full year profit forecast by 9.5% and didn’t announce a writedown on subprime loan investments.

Japan Times reported yesterday 21 financial institutions are in an alliance to acquire temporarily nationalized bank Ashikaga Bank for 310 billion yen. 75 billion yen would be jointly contributed by the Bank of Yokohama, Toho Bank, Gunma Bank, Joyo Bank, Chiba Bank, Yamanashi Chu Bank, Hachijuni Bank and Shizuoka. Nikko Citigroup Limited would pay for another 75 and 80 billion-yen.

Nomura Securities Company is also leading another consortium that is vying for the bank that was put under state control in 2003.

Of the Nikkei 225 index, Shizuoka Bank led gainers, rising 4.60%, followed by increases of 4% in Bank of Yokohama, 3.87% in Toho Company Limited, 3.70% in Fast Retailing, and 3.09% in Chiba Bank Limited.

Shizuoka Bank gained after Resona Holdings raised its full year profit forecast by 9.5% and didn’t announce any writedowns on subprime loan investments, stoking expectations that losses on sub-prime securities might be limited. The bank also is part of an alliance by twenty one financial institutions to acquire nationalized bank Ashikaga Bank.

Tosoh Corporation led decliners in the Nikkei 225 index stocks with a drop of 8.53%, followed by losses of 7.69% in Komatsu Limited, of 7.67% in Sojitz Corporation, of 7.34% in Mitsui Engineering & Shipbuilding, and of 7.18% in Sumitomo Heavy.

Nikkei news reported today Komatsu Limited would build a factory in Kanazawa, Ishikawa Prefecture, for assembling ultralarge coal and iron ore excavators for export to China, Indonesia and other Asian countries. The facility is expected to open in August 2009.

The Wall Street Journal reported China’s regulators have ordered banks to freeze lending until the end of the year. Authorities in China are making efforts to prevent the economy from overheating. Machinery makers and trading houses fell on the news. Mitsui Engineering & Shipbuilding Company fell 7.34%, Kawasaki Heavy Industries plunged 5.10% and Mitsui & Company plummeted 6.49%.

Exporters declined as the yen firmed to 110.54 from 110.52 against the dollar on the comments by the Federal Reserve Bank of Minneapolis President Gary Stern foreclosures would likely rise and homebuilding would remain subdued. Canon slumped 0.36% and Sony Corp climbed down 0.56%

Meiji Dairies Corp slumped the most in 16 months by 6.35% after Daiwa Institute cut its rating to “underperform”. Last week the company cut its net income forecast 23% to 10.6 billion yen for the year ending March 31. The company’s profits fell 23% to 7.88 billion yen against the forecasted 8.6 billion yen as sales of yoghurt plummeted.