Rise in Nikkei Reflects U.S. Rebound

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

Stocks in Japan rebounded, reflcting a mild rally in the U.S. indexes. For a week, stocks in Japan have traded sideways and investors have been cautious ahead of the holiday sales season in the U.S. Nikkei 225 index jumped 1.7% to 15,135 and broader Topix index edged 2% higher. Exporters edged higher led by automakers, consumer electronics, and banks. The Minister of State for Financial Services estimated that the U.S. sub-prime related losses at the Japanese banks may reach 300 billion yen.

[R]6:00AM New York, 7:00PM Tokyo - Tokyo rallies 1.66% on financial stocks and exporters. Minister of State for Financial Services and Administrative Reforms Yoshimi Watanabe estimated overall losses from the U.S. foreclosures to reach 300 billion yen.[/R]

Japan’s stock indexes gained buoyed by strong retail sales in U.S. and on news China Investment Corp might invest part of its $200 million holdings in Japanese stocks.

In Tokyo trading, Nikkei 225 rose 1.66% or 246.44 to 15, 135.21, while the broader Topix Index gained 29.65 to 1,467.03.

In the first section of the Tokyo Stock Exchange 8.9 billion shares worth 1.1 trillion yen were traded an in the second section 286 million shares valued at 5.1 billion yen changed hands.

Of the Nikkei 225 stocks 179 gained, 40 declined, and 6 were unchanged. Brewer Sapporo Holdings led advancers with a rise of 7.45%, followed by increases in lender Mitsubishi UFJ Nicos of 6.90% on news sub-prime losses amount to a fraction of $50million of the world’s largest financial institutions. Other financial stocks gained as well. Mitsubishi UFJ Financial Group edged up 6.79%, Mizuho Financial Group soared 5.35%, and Sumitomo Mitsui Financial Group climbed 6.89%.

Nikkei news reported that China Investment Corp, which manages over $1.4 trillion in sovereign wealth funds, is set to invest part of its holdings in Japanese equities.

Bloomberg News said today ShopperTrack RCT reported that retail sales on Black Friday, a day after Thanksgiving holiday, rose 8.3% to $10.3 billion from a year before. The news lifted exporters. Toyota Motor Corporation firmed 2.04%, Canon Incorporated firmed 2.57%, and Komatsu Limited gained 1.94%

Separately, Comscore Incorporated announced Internet purchases increased 29% on Thanksgiving and 22% the day after, notwithstanding the fact that shoppers still spent 3.5% less as retailers cut prices and offered discounts to lure back customers.

Bloomberg news also reported today Minister of State for Financial Services and Administrative Reforms Yoshimi Watanabe said banks booked combined losses of 119 billion yen in the first fiscal year, adding 107 billion-yen appraisal losses were yet to be reported.

According to Watanabe aggregate losses from foreclosures on U.S. home loans could reach 300 billion-yen.

Nikkei said today non-manufacturing businesses, including those in power, transport and real estate industries plan to spend 14.8% more in the fiscal year ending in March 2008 on rising energy costs and real estate projects. Spending by manufacturing companies is poised to climb 8.7% against 13.5% in the previous year, and at technology firms and automakers will increase by 6%.

The yen firmed to 108.28 from 108.31 against the dollar.

Sapporo Holdings led the gainers in the Nikkei 225 index with a rise of 7.45% followed by gains in Mitsubishi UFJ Nicos of 6.90%, in Sumitomo Mitsui of 6.89%, in Mitsubishi UFJ Financial Group of 6.79%, and OKI Electric Industries of 6.67%.

Electronic companies also firmed as U.S. stores offered discounts to lure back customers that had been affected by worsening economic conditions. Matsushita Electric Works gained 0.66% and Matsushita Electric Industrial Company rose 1.61%.

Nippon Soda Company led the decliners with a loss of 7.20%, followed by losses of 4.93% in Kumagai Gumi Company, of 3.60% in Taiheiyo Cement, of 3.34% in Fujitsu Limited and of 2.17% in Kawasaki Kisen.

Fujitsu Limited retreated after net income fell 62% on higher taxes in international businesses. Group net profit fell to 5.44 billion yen in the quarter ended Sept. 30 from 14.18 billion yen a year earlier on a higher tax payment on its U.K. operations.

NIS, gained on news that the U.S. buyout fund Texas Pacific Group is set to acquire as much as 40% in the company.

Nikkei news reported that Nippon Life Insurance Company plans to increase its domestic bond holdings by about 700 billion yen in the second half of the fiscal year ending in March 2008.