Strength in Yen Lowers Growth in Japan

123jump.com Staff
14 Mar, 2008
New York City

Investors are increasingly grappling with a possibility of a recession in Japan if the U.S. demand for Japanese goods keeps falling. Japan, which relies on exports for most of its economic growth, may be the first nation to enter into a recession following the U.S. Most economists believe that the U.S. is already into a recession. Rising yen against the dollar will hurt corporate profits and inflation in food and energy prices will crimp disposable income.

[R]5:00AM New York, 7:00PM Tokyo – Investors worried that rising yen against dollar and record oil prices may push economy into recession and keep inflation growing.[/R]

Market Sentiment

In Tokyo trading Nikkei 225 declined 1.54% or 191.84 to 12, 241.60, and the broader Topix Index fell 1.9% or 22.64 to 1,193.23.

In the first section of the Tokyo Stock Exchange 19 billion shares worth 2.5 trillion yen changed hands and in the second section 388 million shares valued at 4.9 billion yen changed hands.

Of the Nikkei 225 stocks 35 gained, 182 declined and 8 were unchanged. Mitsubishi Paper Mills Ltd led advancers in the Nikkei 225 index shares with a rise of 4.40% followed by Meiji Dairies Co. rising 2.64%.

Carlyle Capital defaults

Carlyle Capital Corp, which trades in Amsterdam, said yesterday its lenders will take possession of all its remaining assets after failing to agree on a refinancing package. As of yesterday, the company’s portfolio had U.S. government agency AAA-rated Residential Mortgage-backed Securities. The investment fund could not meet its call for margin call of $98 million on $17 billion of mortgage securities prompting asset seizure from a group of 13 lenders.


FSA to sell Ashikaga to Nomura Holdings Co

The Nikkei news reported today that the Financial Services Agency will sell nationalized lender Ashikaga Bank to a group led by a Nomura Holdings Inc. investment unit.

Fukuda to try an prevent vacuum at BOJ

Bloomberg news reported today that Chief Cabinet Secretary Nobitaka Machimura said today Yasuo Fukuda will work expeditiously to avoid a vacuum at the Bank of Japan after Governor Toshihiko Fukui’s term expires on March 19.

The ruling party’s proposed candidate Toshiro Muto was rejected by the opposition as he was deemed too close to the government and had worked in the finance ministry.

Gainers & Losers

Mitsubishi Paper Mills Ltd led advancers in the Nikkei 225 index shares with a rise of 4.40% followed by increases in Meiji Dairies Co. of 2.64%, in Inpex Holdings of 2.42%, in Tokai Carbon Co. of 2.36%, and in Terumo Corp. of 2.14%.

Inpex Holdings continued to rise as oil hovered above record price of $110 a barrel.

Sumitomo Heavy Industries led the decliners in the Nikkei 225 index shares with a drop of 7.46% followed by losses in Kawasaki Kisen of 6.96%, in Sky Perfect JSAT of 6.56%, in Nikon Corp. of 5.77%, and in Daiwa House Industries of 5.66%.

Other realty stocks fell after Leopalake21 Corp, Azel Corp and Ardepro Co cut their profit forecasts. Sumitomo Realty shed 5.34% and Heiwa Real Estate declined 5.10%.

Shipping lines fell as well. Mitsui O.S.K. Lines declined 4.57%.

Exporters were mainly battered by a rising yen, which gained to a 12-year high of 99.85 against the dollar yesterday. Canon Inc. fell 1.35% and Sony Corp slumped 2.33%.

Company News

Hitachi reviews earnings forecast

Hitachi Ltd said in a statement today operating loss at its consumer electronics business will increase to 112 billion yen from 98 billion yen forecasted in February and 58.4 billion yen a year earlier.

The company also slashed its sales forecast by 1.3% to 1.51 trillion yen on increased competition from Matsushita Electric Industries and Samsung Electronics.

Hitachi added that it will book a 62 billion local tax charge.