Tokyo Stocks Decline 1.93%

123jump.com Staff
11 Jan, 2008
New York City

Stocks in Japan fell sharply on the worries related to retail and realty stocks. Nikkei 225 declined 1.93% or 277.32 to close at 14,110.79 and the broader index Topix declined 1.7% to 1,377.58. J Front Retailing led decliners of the Nikkei 225 index shares with a drop of 10.72% followed by losses in Sumitomo Heavy Industry of 8.32%, in Tokyu Land Corp of 7.59%, in Sumitomo Realty of 7.26%, and in Nippon Sheet Glass of 7.10%.

[R]5:00AM New York, 7:00PM Tokyo - Retailers and realty stocks drag Tokyo down 1.93%.[/R]

Stocks in Japan fell as retailers cut profit estimates and fears of widening credit market losses affected investor sentiment.

In Tokyo trading Nikkei 225 declined 1.93% or 277.32 to 14,110.79, down 7.8% since trading resumed this year on January 4, while the broader Topix Index fell 1.7% to 1,377.58.

In the first section of the Tokyo Stock Exchange 11 billion shares worth 1.4 trillion yen were traded and in the second section 312 million shares valued at 3.6 billion yen changed hands.

Of the Nikkei 225 stocks 33 rose, 189 declined, and 3 were unchanged.

J Front Retailing led decliners in the index with a loss of 10.72% after it cut its full year net income forecast by 12% to 195 billion yen on lower than expected revenue.

Bank of Japan Talks

Bank of Japan Governor Toshihiko Fukui told a parliamentary committee in Tokyo today that Japan’s economic growth is slowing on the sharp decline in housing investment.

Fukui also added that core consumer prices are expected to increase on rising food and energy costs.

U.S. Federal Reserve Chairman Ben Bernanke also said yesterday that the downside risks to economic growth have become pronounced in 2008 and further cuts may be necessary.

The New York Times reported yesterday that Merrill Lynch might report $15 billion in write-downs, twice higher than the previous estimates.


Mergers and Capitalization Plans

Nikkei news online reported today that JFE Holdings Inc and IHI Corp are in talks to create Japan’s largest shipbuilding company to compete with Chinese and South Korean yards as early as this year.

According to the reports, IHI shipbuilding unit IHI Marine United Incorporated will be merged into JFE Universal Shipbuilding Corporation. JFE will also raise its stake in JFE Universal Shipbuilding Corporation from 50% to 80%.

The new company will have sales estimated at 345 billion yen. JFE Holdings slipped 0.55%, while IHI Corp climbed 1.40%.

The Japan Times online publication reported today that Japan Airlines Corporation is seeking a capital injection totaling 60 billion yen from its four major creditor banks as part of 150 billion yen capital increase plan.

The banks include the Development Bank of Japan, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation.

Index Movers

Of the Nikkei 225 index shares Nichirei Corp led advancers with a rise of 7.43% followed by gains in Clarion Company Limited of 3.79%, in Trend Micro Incorporated of 2.43%, in NGK Insulators of 2.36%, and in Mitsui Sumitomo Insurance Company Limited of 2.30%.

Sharp Corporation and Matsushita Electrical Industrial Company rose after Nomura Holdings raised its rating on the stocks to “buy” from “neutral”. The stocks rose 2.16% and 0.93% respectively.

J Front Retailing led decliners of the Nikkei 225 index shares with a drop of 10.72% followed by losses in Sumitomo Heavy Industry of 8.32%, in Tokyu Land Corp of 7.59%, in Sumitomo Realty of 7.26%, and in Nippon Sheet Glass of 7.10%.

Aeon Company Limited also slipped 5.45%.


Earnings Update

J Front Retailing fell after it cut its full year net income forecast by 12% to 195 billion yen. Seven & I Holdings declined 6.33% after it lowered its net income forecast by 12% to 127 billion yen on costs associated to introducing an electric payment system at its convenient stores.