Weakness Persists in Tokyo

123jump.com Staff
18 Dec, 2007
New York City

Stocks in Japan fell for the fifth session in a row on the weakness in financial sector. Nikkei 225 declined 0.3% to close at 15,207.86. However, the broader index Topix dropped nearly 3% to close at 1,469.77. Finance Minister in Tokyo said that Japan will limit bond sales to 25.4 trillion yen in the fiscal 2008. Yen edged lower. Hong Kong, Korea, and Singapore rebounded but India, Indonesia, and Australia declined.

[R]6:00AM New York, 8:00PM Tokyo – Stocks in Tokyo fell for the fifth session in a row as weakness in financial sector drag averages.[/R]

In Tokyo trading Nikkei 225 pared a 0.7% decline by mid-day to close down 0.27% or 41.93 to 15,207.86, while the broader Topix Index shed 2.93% to 1,469.77.

In the first section of the Tokyo Stock Exchange 9 billion shares valued at 1.1 trillion yen changed hands while in the second section 305 million shares worth 10 billion yen were traded.

Of the Nikkei 225 stocks 101 gained, 106 declined, and 18 were unchanged. IHI Corp led advancers with a rise of 4.2% followed by Dowa Holdings.

The New York Federal Reserve Bank’s Buffalo branch general economic index fell 10.3 in December from 27.4 in November. Economists forecasted the index would be at 20%.

U.S. National Association of Home Builders/Wells Fargo index of homebuilder confidence was at 19, the lowest in 24 years. Home builders’ confidence has been at its low for the last three months in a row as housing market continues to suffer from tighter mortgage standards, rising inventory of homes for sale, and falling home prices.

Kyodo news reported yesterday that consumer loan and credit companies would set up an association on Wednesday to self-regulate the industry as the revised money lending business law moves into the second stage of implementation.

The new legislation mandates the Japan’s Financial Services Agency to exert a stronger influence in consumer loan companies and other non-bank moneylenders.

Separately, consumer lender Takefuji Corp said yesterday that it will lower its maximum interest rate on January 25th, 2008 to 18% from the current 27.3% before the new legislation is enacted by the Diet. The new rules require consumer lenders to limit the rate to 20% as of late 2009.

Bank of Japan reported yesterday in its quarterly preliminary report that the outstanding balance of financial assets fell by 20 trillion to 1.536 quadrillion yen at the end of September as a result of valuation losses on securities precipitated by the credit market turmoil.

The balance of shares and equities stood at 173.20 trillion, down from 189.96 trillion at the end of June. Furthermore, government bonds and investment trust beneficiary certificates stood at 35.37 trillion yen, while 10.11 trillion was for outward investment in securities. Individual assets held in cash and deposits were up 0.4% to 770.49 trillion yen.

Japan’s Finance Minister Fukushiro Nukaga said at a press conference in Tokyo today that new bond sales for the next fiscal year starting on April 1st, 2008 would be kept below 25.4 trillion yen.

Nukaga said the government will aim at bolstering economic growth and revitalize rural areas, and would tap about 10 trillion yen of reserved funds in “zaito” loans to affiliated agencies and local government.

Of the Nikkei 225 index shares IHI Corp led advancers with a rise of 4.18% followed by rises of 3.82% in Sumco Corp, of 3.44% in Showa Denko K.K, and of 2.89% in Toto Limited.

Exporters also gained after the yen weakened to 113.15 from 112.95 yesterday as economists bet the Bank of Japan will keep interest rates on hold at 0.5% on Thursday. Casio Computers firmed 0.08% and Sony Corporation added 0.49%.

Chiyoda Corp led the decliners in Nikkei 225 index with a fall of 4.98% followed by losses in Nikon Corp of 4.68%, in Alps Electric Company Limited of 4.63%, in Komatsu Limited of 4.41%, and Taiyo Yuden Company of 3.17%.

Shipbuilders also slumped on concerns economic growth is easing. Kawasaki Heavy Industries fell 2.47%.

Aeon Corp said on Monday that it is seeking investor support to block 15 billion yen takeover of drugstore CFS by Ain Pharmaciez Inc at a shareholders meeting on January 22nd, 2008. Aeon needs the support of at least 18% of voting rights to veto the takeover.