China to Invest $10 B in Inpex

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

Japan stocks rallied on the back of higher market close in the U.S. In Tokyo trading Nikkei 225 gained 3.07% to 13,914.57, and the broader Topix Index rose 2.6% at 1,355.54. China investment Corp is likely to invest $10 billion in oil refiner Inpex in Japan and follow up with more investments in the country. Aioi Insurance reported a net loss of 4 billion in the nine-month period ending in December.

[R]5:00AM New York, 7:00PM Tokyo – Stocks in Japan rose after a rally and rescue talks for Ambac Financial lifted stocks in the U.S. Aioi Insurance reported smaller than expected loss.[/R]

Japan stock indexes advanced as plans by a group of banks to bail out bond insurer Ambac Financial Group restored investor confidence in financial stocks. Reports that China Investment Corp plans to invest $10 billion in Japan also helped to boost stocks.

In Tokyo trading Nikkei 225 gained 3.07% or 414.11 to 13,914.57, and the broader Topix Index rose 2.6% or 34.17 at 1,355.54.

In the first section of the Tokyo Stock Exchange 10 billion shares worth 1.1 trillion yen were traded and in the second section 423 million shares valued at 4.9 billion yen changed hands.

Of the Nikkei 225 stocks 210 rose, 13 declined, and 2 were unchanged. Mitsui Sumitomo Insurance Co. led advancers with a rise of 10.15% on the news that a group of banks are likely to provide $3 billion in financial rescue package to help Ambac Financial Group prevent losing its triple-A rating. If insurer lost its highest rating from bond rating agencies, banks may have to write-down bonds leading to a loss of as high as $70 billon.

Bond insurers also advanced on strong profit forecasts from Aioi Insurance.

Ambac Rescue Plan

The Financial Times reported last week that a group of banks including Citigroup, Wachovia, Barclays, Royal Bank of Scotland, Societe Generale, BNP Paribas, UBS and Dresdner Bank, is preparing to inject up to $3 billion into the troubled bond insurer Ambac Financial Group to prevent a cut of its triple-A rating. The deal could be finalized as early as this week. Ambac is also considering raising equity from shareholders.

CIC to invest $10 billion in Japan

The Times reported on the weekend that China Investment Corp. plans to invest $10 billion in buying a sizeable stake in oil refiner Inpex Holdings and recruit for a fund manager to monitor its investments on the Tokyo Stock Exchange.

After investing in stock exchange listed shares, CIC is expected to diversify into real estate and other direct investments.

METI lowers assessment of regional economies

Nikkei News online edition reported today that the Ministry of Economy, Trade and Industry downgraded its assessment on regional economies after its bureau chief from four of the ten areas noted that business sentiment has worsened.

Car Sales to Rise

Bloomberg news today that Japan Automobile Dealers Association said at a press conference in Tokyo today domestic vehicle sales, excluding minicars, might be higher than 3.43 million units sold last year on rising sales of new car models.

Gainers & Losers

Mitsui Sumitomo Insurance Co. led advancers in the Nikkei 225 index shares with a rise of 10.15% followed by rises in Sumitomo Heavy of 9.52%, in Sumco Corp. of 9.27%, in Sompo Japan Insurance of 8.95%, and in Millea Holdings 8.92%.

Aioi Insurance Co. reported in the nine-months ended in December 2007 a net loss of 4 billion yen that was lower than 5 billion yen expected by some financial analysts.

In addition, Millea Holdings gained after the company’s nine months profit at 134.7 billion yen surpassed full-year profit forecast of 129 billion yen.

NTT DoCoMo led decliners in the Nikkei 225 index shares with a fall of 3.16% followed by losses in Nippon Suisan of 1.65%, in Sumitomo Metal Mining of 1.59%, in Osaka Gas Co. Limited of 1.40%, and in Nippon Steel of 1.34%.

Company News

Renault and Nissan signed an agreement on Friday last week for a $1 billion car plant in southern India.

The two companies signed a memorandum of understanding with the government of Tamil Nadu for a plant near Chennai.

An equal partnership between the state and the two companies is estimated to attract 780 million euros from Renault and Nissan for an annual installed capacity of 400,000 vehicles within seven years.

Production at the integrated greenfield automotive facility located in Oragadam, near Chennai, is due to start at the beginning of 2010.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 414.11 or 3.07% to 13,914.57, in Hong Kong Hang Seng index decreased 35.90 or 0.15% closed to 23,269.14. Australia ASX 200 index increased 61.70 or 1.11% to close 5,621.60.

In South Korea Kospi Index increased 22.68 or 1.34% to close at 1,709.13, in Thailand SET index closed higher 11.88 or 1.44% to 838.74 and Indonesia JSE Index edged increased 10.68 or 0.39% to 2,751.86. Sensex index in India increased 301.50 or 1.74% to 17,650.57.