Sumitomo and China Steel in JV

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

Stocks in Japan rose for the second day in a row but declined for the week. Nikkei 225 Index rose 1.5% to 15,257 today but lost 1.7% for the week. The Bank of Japan said in its monthly report that slow-down in construction industry has hurt the economic growth. Toshiba gained after Sharp was reported to buy more digital chips from Mitsumi Electric Company. Sumitomo Metal and China Steel joint venture will build a steel plant in Vietnam.

[R]5:00AM New York, 7:00PM Tokyo – Sumitomo Metal Industries and China Steel form a joint venture to build a plant in Viet Nam.[/R]

Stocks in Japan rose for the second day after Toshiba and Hitachi realigned their interests in disk drive and chip manufacturing businesses.

In Tokyo trading Nikkei 225 rose 1.5% or 22.5 to 15,257.00 but down 1.7% for the week, while the broader Topix Index gained 11.64 to 1,469.20.

In the first section of the Tokyo Stock Exchange 8.7 billion shares worth 1.0 trillion yen were traded and in the second section 392 shares worth 6.7 billion changed hands.

Of the Nikkei 225 stocks 166 gained 53 declined, and 6 were unchanged. Mitsumi Electric Company Limited led gainers with a rise of 6.61% on reports of a restructuring in the electronics sector.

Exporters gained the yen slipped 0.19% from 113.02 to 113.04 against the dollar. Sony climbed 1.16%, Casio Computer jumped 2.35% and Toyota Motor Corporation soared 1.52%.

The Bank of Japan said yesterday in its monthly report that the pace of economic growth appears to be slowing on a significant drop in housing investment which is likely to recover in the coming quarters. The new building code has brought virtual halt on most residential and commercial construction activities.

According to the bank, domestic corporate goods prices and consumer prices are likely to increase as a result of increase in international commodity prices and the rise in food and petroleum prices.

The bank still considers the financial environment as accommodative, notwithstanding the credit demand in the private sector that has been more or less flat.

Sumitomo Metal Industries announced yesterday that the company would form a joint venture with China Steel Corp to establish a plant on the outskirts of Ho Chi Minh City in Vietnam. China Steel Corp will control 50% in the venture and Sumitomo Metal Industries will have 30% equity.

The steel plant is expected to commission in 2011 and produce steel sheets. Total investment is estimated at 110 billion yen.

Steelmakers advanced on news that Sumitomo Metal Industries would be partnering China Steel Corp in establishing a plant in Vietnam. Nippon Steel rose 4.92%.

Mitsumi Electric Company led the gainers in the Nikkei 225 Index with a rise of 6.61% followed by gains of 6.58% in Matsushita Electric Works Limited, of 6.29% in Japan Steel Work, in NSK Limited of 6.21%, and in Taiheiyo Cement of 5.51%.

Mitsumi Electric Company rose along with other electronic companies on the reports from Nikkei that Sharp Corporation would expand its purchases of advanced microchips from Toshiba Corp.

Also, Toshiba would most likely exit its venture with Matsushita Electric Industries Company and Hitachi through selling its 15% stake in IPS Alpha Technology Limited and buy its displays from Sharp Corporation. Sharp Corporation rose 2.89%, Toshiba gained 2.45%.

Hitachi rose 3.60% on Nikkei reports the company will spin off its hard disk drive business to U.S. buyout fund Silver Lake Partners.

Mitsui Sumitomo Insurance Company Limited led decliners in the Nikkei 225 Index with a drop of 3.44% followed by losses in J Front Retailing of 3.00%, in Nippon Express of 2.59%, in Sompo Japan Insurance of 2.59%, and in Mitsui OSK Lines of 2.51%.

Financial stocks slumped as Bear Stearns in New York recorded its first loss of $854 million in the fourth quarter and a surprise admission by bond insurance company MBIA Inc that it had $8.1 billion in collaterized debt obligations.

Mitsubishi IFJ Financial Group dropped 1.23%, Mizuho Financial Group tumbled 0.37% and Mitsui Sumitomo Financial Group plunged 3.44%.

Kyodo news online edition reported today that Sumitomo Mitsui Financial Group has rejected a request by the U.S. for the contribution of $5 billion towards a subprime mortgage bailout fund.

Nikkei news also reported today that Canon Inc is likely to report full year net income increase to 488 billion yen, 7% down from the initial projection of 500 billion yen. Canon closed down 2.24%