Tokyo and Hong Kong Down 4%

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

Stocks in Tokyo and Asia fell sharply after comments from the IMF Chief suggested that monetary stimulus alone in the U.S. will not save the expected slowdown in the U.S. economy. He said that a coordinated global fiscal stimulus may be necessary. Separately, local economists in Japan worried that declining consumer spending and wages and worsening economic conditions may drive economy into recession. Shanghai plunged 7% and Singapore, Korea and Taiwan dropped 4%.

[R]5:00AM New York, 7:00PM Tokyo- Subprime fears and comments from IMF Chief led Tokyo stocks down 3.97%.[/R]

Stocks in Japan dropped as exporters declined on a strengthening yen and on observations by the IMF that global economic conditions will worsen.

In Tokyo trading Nikkei 225 fell 3.97% or 541.25 to 13,087.91, while the broader Topix Index slumped 51.74 to 1,293.03. Market sold-off after comments from IMF Chief in Switzerland, worsening economic indicators, and worries that the U.S. stimulus package will not be enough to avert a recession in the U.S.

In first section of the Tokyo Stock Exchange 8.3 billion shares valued at 989 billion yen were traded and in the second section 493 million shares valued at 4.7 billion yen changed hands.

Of the Nikkei 225 shares 5 rose, 216 declined, and 4 were unchanged. Dainippon Sumitomo led advancers with a rise of 3.17% followed by Meiji Seika climbing 1.12%.

IMF Managing Director Dominique Strauss-Kahn said at the weekend during a public debate on the global economy at the World Economic Forum in Davos, Switzerland that there was no doubt that “there will be a serious slowdown that will require a serious response”, adding that governments cannot rely on monetary instruments alone to forestall a global economic slowdown.

Just months ago he had said that monetary stimulus will be sufficient and had urged the U.S. to restrain from any fiscal stimulus. His reversal of stance is partly from the worsening credit crisis in the U.S., spreading of American contagion to UK, and persisten choppiness in the global financial markets.

Bloomberg news reported today that Goldman Sachs chief economist in Japan Tetsufumi Yamakawa reported in a research note published today that declining domestic demand and wages, and falling industrial output will lead Japan into a recession.

Tetsufumi added that export shipments to China in the fourth quarter, though expected to offset a shrinking U.S. market, were growing at a much slower pace in volume terms than in the previous quarters.

Japan’s Financial Services Agency announced on its website yesterday that Kanto Local Bureau issued an administrative order against Teramento Corporation requiring it to submit correction of shareholdings reports submitted Friday on securities filings worth 20 trillion yen.

In the filings Teramento Corporation claimed majority shareholdings in Astellas Pharmaceutical Company, Sony Corporation, Mitsubishi Heavy Industry, Toyota Motor Corporation, Fuji Television Network Incorporated, Nippon Telegraph and Telephone Corporation.

Japan’s National Tourist Organization announced today that foreign tourists visiting Japan rose 13.8% from previous year to 8.3 million in 2007 on increasing number of tourists from Asian countries spurred by robust economic growth in the region.

About 2.6 million visitors were from South Korea, 1.3 million were from Taiwan and visitors from China jumped 16.2% from a year earlier to 943,400.

JNTO also added that the number of Japanese traveling abroad fell the most in five years by 1.3% year-on-year to 17 million.

Of the Nikkei 225 index shares Dainippon Sumitomo led advancers with a rise of 3.17% followed by rises in Meiji Seika of 1.12%, in Tokyo Dome Corporation of 0.87%, in Comsys Holdings of 0.36%, and in KDDI Corporation of 0.28%.

Tokyo Dome Corporation gained on Nikkei news online reports that transactions of office buildings and commercial facilities in Japan soared 31% from a year ago to 177 cases in December buoyed by strong demand for properties in the Tokyo metropolitan area from overseas investors.

KDDI Corporation rose after reporting Friday that net profit for the nine months to December rose 12.4% to 214.8 billion from a year ago period.

The company also reported that revenue increased 7.2% for the period under review to 2.64 trillion yen led by a rise of 1.9 million subscribers to its “au” mobile phone service.

KDDI president Tadashi Onodera added that the company now expects a record operating profit of more than 400 billion yen.

Sumco Corporation led decliners in Nikkei 225 stocks with a plunge of 11.46% followed by losses in Fanuc Limited of 9.09%, in Mitsumi Electric Company of 8.85%, in Fuji Electric House of 8.19%, in Mitsumi Engineering & Shipbuilding of 8.17%.

Exporters also fell after the yen gained from 106.72 to 106.08 against the dollar at the close of trade. Canon Incorporated fell 4.94%, Sony Corporation shed 3.52% and Toyota Motor Corporation declined 2.51%.