Japan Down 2.5%; Hong Kong, India Plunge 4%

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

Stocks in Japan fell sharply reflecting a weakness in Asia, weak October housing starts in the U.S., and larger than expected losses at Freddie Mac. Nikkei 225 index fell 2.46% or 373.86 to 14,837.66 and broader Topix fell 2%. Oil in Asian trading rose 13% to $99.29 per barrel. October trade surplus in Japan rose 66% to 1.02 trillion yen on strong rise in exports to Europe, China and other Asian and Middle Eastern nations. India and Hong Kong fell 4%.

[R]7:00AM New York, 8:00PM Tokyo - Record oil price, U.S. sub-prime losses and weakening yen leads Tokyo down 2.5%. October trade surplus soars 66.1% to 1.02 trillion yen.[/R]

Japan’s stock averages plummeted on resurgent fears on subprime losses and as the yen climbed to a two-year high against the dollar.

In Tokyo trading Nikkei 225 slid 2.46% or 373.86 to 14,837.66, while the broad Topix Index fell 30.55 to 1,438.72.

U.S. mortgage finance company, Freddie Mac posted a second quarter net loss of $2 billion on higher provisions of credit losses, adding that the housing slump would continue through year end. Separately new home construction in the U.S. in October fell and new permits for home building fell as well. The decline in housing market may take longer than anticipated earlier by the most analysts.

Financial stocks fell on the news. Mitsubishi UFJ Financial Group retreated 1.60%, Mizuho Financial Group declined 4.08% and Sumitomo Mitsui Financial Group dropped 0.87%.

In the first section of the Tokyo Stock Exchange 9.0 billion shares valued at 1.1 trillion yen were traded and 463 million shares worth 6.7 billion yen were traded in the second section.

Of the Nikkei 225 stocks 32 gained, 191 declined, and 2 were unchanged. Mitsubishi Paper Mills Limited led advancers with a rise of 4.81% on news that Oji Paper Company Limited would pay 1.8 billion yen for a 2.34 stake in company as part of a production alliance, followed by Chuo Mitsui Trust rising 7.77%.

Oil prices for January delivery rose 1.3% to $99.29 per barrel. Inpex Holdings edged up 3.60%. Mitsubishi UFJ also raised the rating of the stock to “outperform”.

Japan’s Ministry of Finance announced today in its preliminary October trade statistics. Exports soared to a record 13.9% on increased exports of automobiles and electronics to Asia and Europe that helped offset a 1.5% decline of shipments to the U.S. Analysts had forecasted a 12.2% rise in aggregate exports.

According to the statistics, exports to China jumped 19.2% from an increase of 16.4% in September to a record 1.17 trillion yen. Shipments to Asia rose by a seasonally adjusted 12.9%, while exports to Europe spiked 23.7% to a record 1.14 trillion yen.

However, shipments to the U.S. declined 1.5% from a 9.3% slump in September to 1.5 trillion yen. Overally, imports rose 7%, yielding a trade surplus of 66.1% to 1.02 trillion yen. Rising oil prices and a strengthening yen against the dollar are threatening export gains in November.

The yen firmed to 109.94% from 108.98 against the dollar as minutes from the U.S. Federal Reserve October meeting showed revision of 2008 economic growth forecast to 1.8% from an estimate of 2.5% and 2.7%. Exporters fell on the news. Canon dipped 1.82%, Sony Corporation declined 1.88% and Toyota Motor Corporation dropped 2.78%.

Of the Nikkei 225 index shares, Mitsubishi Paper Mills Limited led gainers with a rise of 4.81%, followed by rises of 4.22% in Nippon Sheet Glass, 3.60% in Inpex Holdings, 3.49% in Toho Company Limited and 2.78% in Shizuoka Bank.

Mitsubishi Paper Mills Limited gained after announcing Oji Paper Company would pay 1.8 billion yen for a 2.34% stake in the company.

Nippon Sheet Glass Company rose after rebounded from a loss in the first quarter to record an increase in net profit from 3.86% to 4.55% in the second quarter. Sales in the three months to September also gained 2.9% to 216.1 billion yen. First half net income also jumped to 51.5 billion yen from 20.3 billion yen, more than the 47 billion yen forecasted. Net income for the fiscal year is expected to firm to 53 billion yen and full year sales are expected to rise 25% to 850 billion yen.

Sompo Japan Insurance led the decliners in the Nikkei 225 index with a drop of 15.58%, followed by losses in Sumco Corporation of 12.04%, Toho Zinc Company Limited of 8.37%, in Taiheiyo Cement of 7.49%, and in Fuji Heavy Industries of 7.39%.

Sompo Japan Insurance slumped the most in a decade after announcing it might have to pay 30 billion yen in subprime related insurance claims. Insurance company Millea Holdings fell 3.36% as well.

Mitsui O.S.K. Lines fell 5.52% and Kawasaki Heavy Industries Limited plunged 0.57%.