Tokyo Stocks Recover, Subprime Losses Rise

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

Stocks in Japan recovered from a morning loss of 1.4% to close up 1.85% or 247.44 to 13,592.47. The Topix Index gained 2% or 26.20 to close at 1,346.31. Banks in Japan are likely to report larger than estimated sub-prime losses according to local news. The estimate of losses for 2007 are running as high as 500 billion yen from the five largest banks. December csh earnigs for wages declined 1.9% and for contract employees rose 0.3%.

[R]5:00AM New York, 7:00PM Tokyo - Japan’s average monthly wages per regular employee declined 1.9% in December from a year earlier.[/R]

Stocks in Japan rallied on strong corporate earnings especially from carmakers and a weakening yen, including news that the U.S. Federal Reserve slashed its key rate by 0.5% yesterday to 3.5%.

In Tokyo trading Nikkei 225 climbed from a 1.4% drop in the morning trading to close up 1.85% or 247.44 to 13,592.47, and the broader Topix Index also rose from a 1.8% decline to a gain of 26.20 to 1,346.31.

In the first section of the Tokyo Stock Exchange 10 billion shares worth 1.2 trillion yen were traded and in the second section 729 million shares valued at 5.2 million yen changed hands.

Of the Nikkei 225 stocks 177 gained, 44 declined, and 4 were unchanged. Yahoo Japan Corporation led advancers with a rise of 11.68% after reporting a 13% increase in profit in the third quarter yesterday.

Japan’s Ministry of Health, Labor and Welfare reported in its provisional report of monthly labor survey that average cash earnings per regular employee declined 1.9% in December from a year ago to 596,895 yen, while contractual cash earnings rose 0.3% to 271,495 yen.

Also scheduled cash earnings jumped 0.5% to 250,995 yen. However the real wage index fell 2.7%.

The labor ministry further added that total hours worked per regular employee fell 1.5% from a year ago to 150.6 hours in December and non-scheduled hours worked in manufacturing gained 0.5% to 17.3 hours.

The statistics also show that number of regular employees was increased by 1.7% in December year-on-year, while full-time and part time employees rose 1.7% and 1.9% respectively.

Nikkei news online reported today that Japan’s five biggest banks-Mitsubishi UFJ, Mizuho Financial Group, Sumitomo Mitsui Financial Group, Sumitomo Trust & Banking-may face combined subprime losses of 500 billion yen.

Already Sumitomo Trust yesterday revealed subprime losses amounting to 29.9 billion yen and Sumitomo Mitsui also booked 99 billion yen in losses over 9 months.

According to the online news service, Mitsubishi UFJ Financial Group may report 50 billion yen in losses in the nine months to December 2007 and that the losses might be increased to 90 billion yen for the full year ending in March 2008.

In addition, analysts have now projected sub-prime losses at Mizuho Financial Group may reach 300 billion yen.

The yen weakened from 106.58 to 106.60 against the dollar.

Of the Nikkei 225 index shares Yahoo Japan Corporation led advancers with a rise of 11.68% followed by gains of 11.13% in Terumo Corporation, of 8.70% in Matsushita Electrical Industries, of 8.22% in Alps Electrical Company Limited, and of 7.58% in Sanyo Electric.

Yahoo Japan Corporation rose after reporting yesterday that the company’s third quarter profits jumped 13%.

Terumo Corporation also advanced on strong earnings results.

Carmakers were also buoyed by strong sales in Asia and Europe that helped offset shrinking demand in Japan and in the U.S. Honda Corporation reported yesterday that net profit in the third quarter jumped 35% to 347billion yen from 276billion yen a year earlier.

According to Honda, strong demand from Brazil, Russia, India and China is expected to drive sales in 2008.

Hino Motors rose 6.21% and Toyota Motor Corporation soared 5.43% as a result.

Chugai Pharmaceutical led decliners of the Nikkei 225 stocks with a drop of 17.60% followed by losses of 13.83% in Chiyoda Corporation, of 7.92% in Nippon Soda Company, of 3.23% in Aeon Company Limited, and of 2.46% in Dowa Holdings.

Chugai Pharmaceuticals fell after reporting yesterday profit for the year will decline as the cut in pharmaceutical prices ordered by the government and shrinking sales of Tamiflu and Epogin took their toll on earnings.

Sales of Tamiflu and Epogin are forecasted to drop 81% to 7.3 billion yen and 14% to 47billion yen correspondingly.

Seiko Epsom reported on its website today that net sales in the nine months to December 2007 is estimated to rise 3.4% from a year ago to 1.037 trillion yen, while net income increased 59.5% to 22.2 billion yen in the same period from a year ago.

The company also reported that demand in the inkjet market was flat as growth in Europe and Asia offset contraction in Japan and the U.S, adding that demand for 3G phones is also robust in Europe and North America.

Canon reported that net income for the year will rise 6.5% to 520 billion yen, below the 531.5 billion yen forecasted by economists.

In addition the company also said annual sales are expected to slump the most since 1999. Canon closed down 2.35%.

Mitsui O.S.K. Lines reported today that profit for the quarter to December 31 climbed from 39.8 billion yen to 58.9 billion yen. The company also raised its full year net income projection to 190 billion yen for the year ending March 2008 from 185 billion yen that the company had previously forecasted.