Japan Falls 3.2% on Credit Market Worries

123jump.com Staff
20 Feb, 2008
New York City

Stocks in Japan fell after a surprise write-down from Credit Suisse of $2.85 billion and debt reshceduling from KKR Financial in the U.S. In Tokyo trading Nikkei 225 slipped 3.25% to 13,310.37, and the broader Topix Index fell 3.2% to 1,302.72. A sharp rise in crude oil by 4.7% lifted stocks of trading companies but auto makers and others declined.

[R]5:00AM New York, 7:00PM Tokyo- Automakers and electric utilities suffer as oil price exceed $100 per barrel.[/R]

Stocks in Japan traded lower after a surprise write-downs of $2.85 billion at Credit Suisse that unnerved investors and resurgent oil prices.

Market Sentiment

In Tokyo trading Nikkei 225 slipped 3.25% or 447.54 to 13,310.37, and the broader Topix Index fell 3.2% or 42.57 to 1,302.72.

In the first section of the Tokyo Stock Exchange 9.7 billion shares valued at 1.2 trillion yen were traded and in the second section 452 shares worth 4.6 billion yen changed hands.

Of the Nikkei 225 shares 9 gained, 214 declined and 2 were unchanged. Bridgestone led gainers in the Nikkei 225 index shares with a rise of 2.09% followed by Sapporo Holdings increasing 1.22%.

Oil Prices Increase

Crude oil prices for March delivery gained 4.7% to $100.01 per barrel yesterday in New York trading on expectations that OPEC will cut production in the next meeting on March 5.

The continued decline of the dollar has also driven investors into commodities.

KKR engages Creditors

KKR Financial Holding LLC, ((KFN)) an affiliate of Kohlberg Kravis Roberts & Co, notified the U.S. Securities and Exchange Commission that a debt repayment due on February 15 on notes issued by conduits holding mortgage-backed securities has been deferred until March 3 and the other 50% is scheduled for payment on March 13. The recent deferment follows after the restructuring of loans in October of 2007 when, $270 million of debt payment of mortgage backed securities was deferred.


Credit Suisse in Shock Writedowns

Credit Suisse yesterday announced a second write-down in as many weeks on asset backed securities valuation in structured vehicles of $2.85 billion after “mismarkings and pricing errors” that were discovered when the company conducted an internal review of its asset backed positions.

Last week, the lender reported a loan loss and asset writedowns of 12.5 billion francs.

Housing Investment to Recover

The Bank of Japan showed in minutes of the January 21-22 meeting published on its web site today that it expects the negative effects of the tighter housing conditions that were caused by the promulgation of the revised Building Standards Law in July last year will gradually fall away.

According to the minutes, the Bank also expects that the economy will continue to expand moderately.

Yen Falls

The yen declined today by 0.21% from 107.55 to 107.57 against the dollar.

Gainers & Losers

Bridgestone Corp. led advancers in the Nikkei 225 index shares with a rise of 2.09% followed by rises in Sapporo Holdings of 1.22%, in Mitsubishi Materials of 1.07%, in NTT Data Corp. of 1.06%, and in Sony Corp. of 1%.

Sumitomo Realty & Development Co led decliners in the Nikkei 225 stocks with a drop of 10.96% followed by losses in Fuji Electric House of 8.50%, in Mitsui Fudosan of 8.28%, in Konica Minolta of 7.88%, and in Tokyu Land Corp. of 7.32%.

Automakers also fell on rising fuel prices. Toyota Motor Corp. shed 3.49%, and Honda declined 2.64%.

Realty stocks also plummeted after the Real Estate Research Institute said in a report today that it estimates that sales will fall 8.4% to 123,000 condominiums in 2008.

Company News

The Nikkei news online reported today the Hay Point coal terminal, operated by BHP Billiton-Mitsubishi Alliance, in Australia is preparing to resume shipments.

Separately, the online business edition also said Nintendo Co. is building software for its Wii console, that is poised to augment the company’s revenue streams.