Japan and Asia Stocks Decline

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

Stocks in Japan and Asia fell after the release of world economic outlook from a meeting of policy makers at the IMF and World Bank. The gloomy near term outlook added to the rising loss estimates at Citigroup and Merrill Lynch. Media reports in the UK suggested that two financial firms are likely to report losses in the quarter and a write-down of $15 billion. Nikkei 225 index in Tokyo fell 3% and Topix declined 2.5%.

[R]5:00AM New York, 7:00PM Tokyo – Meeting of world finance leaders and policy makers forecasted tougher times in the near future. Rising estimates of U.S. subprime loan losses leads stocks lower in Japan.[/R]

Stocks in Japan plummeted after the G7 said in a statement near-term economic prospects have weakened and on media reports that the U.S. banks Citigroup and broker Merrill Lynch are expected to report additional write-downs of $15 billion.

In Tokyo trading Nikkei 225 declined 3.05% or 406.22 at 12,917.51, and the broader Topix Index fell 2.5% or 332.38 at 1,246.24.

In the first section of the Tokyo Stock Exchange 6.9 billion shares worth 862 billion yen were traded and in the second section 127 million shares valued at 2.6 billion yen changed hands.

Of the Nikkei 225 stocks 12 gained, 211 declined, and 2 were unchanged. KDDI Corp. led decliners in the Nikkei 225 index shares with a drop of 7.77% after the company reported in its preliminary earnings estimate of 216 billion yen and missed its earlier target.

G-7 lowers outlook for the world economy

The G-7 reported in a statement of G-7 Finance Ministers and Central Bank Governors on Friday last week that while the long-term resilience of the economies remain positive, near-term global economic prospects have weakened.

According to the statement, downside risks to the outlook of the economy persist “in view of the ongoing weakness in U.S. residential housing markets, stressed global financial market conditions, the international impact of high oil and commodity prices, and consequent inflation pressures.”

Emerging markets remain an island of hope but these economies are not immune from global forces.

In addition, the G-7 also pledged speedy implementation the recommendations that financial firms to fully and promptly disclose their risk exposures, write-downs, and fair value estimates for complex and illiquid instruments.

Citigroup, Merrill in $15 billion writedowns

The Sunday Times in London reported yesterday that Citigroup and Merrill Lynch will reveal additional sub-prime writedowns totaling $15 billion.

The report notes that Citigroup will likely announce a revaluation of between $10 billion and $12 billion for its first quarter results on falling values of mortgage securities and the bank is likely to report a loss of $3 billion.

Analysts also expect Merrill will suffer $5 billion of write-downs, despite announcing $18 billion in writedowns in the previous quarter, and the brokerage firm is expected to report a loss of $2.7 billion.

In addition, according to Sunday Times, Deutsche Bank is attempting to sell part of its 35 billion euros of asset backed and mortgage backed debts to a consortium of private-equity firms.

However JP Morgan is expected to post a small profit in spite of a large exposures to leveraged loans.

Gainers & Losers

Fukuoka Financial Group led advancers in the Nikkei 225 index shares with a rise of 3.79% followed by rises in Takashimaya Co. of 2.88%, in Teijin Limited of 2.32%, in Mizuho Financial Group of 1.72%, and Inpex Holdings of 1.67%.

KDDI Corp. led decliners in the Nikkei 225 index shares with a drop of 7.77% followed by losses in CSK Holdings Corp. of 7.14%, in Taiyo Yuden Co of 6.07%, in Takeda Pharmaceutical of 5.85%, and Shinko Securities of 5.84%.

KDDI Corp fell after its annual profit at 216 billion yen missed the company’s forecasts.

Financial stocks fell on the rising estimates of subprime loans related losses. Mizuho Trust & Banking shed 2.67% and Mitsubishi UFJ Financial Group declined 3.74%.

Consumer electronic makers also declined after Nomura downgraded its recommendations for the consumer electronic industry from “neutral” to “bullish”. Sharp Corp. dropped 3.79% and Matsushita Electric Industries declined 4.04%.


Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 406.22 or 3.05% to 12,917.51, in Hong Kong Hang Seng index decreased 856.59 or 3.47% closed to 23,811.20. In Australia ASX 200 index lower 96.90 or 1.78% to close 5,342.40. In Malaysia KL Composite index decreased 13.36 or 1.07% closed to 1,233.43.

In South Korea Kospi Index decreased 33.00 or 1.85% to close at 1,746.71, Indonesia JSE Index edged decreased 31.45 or 1.37% to 2,272.48. Market of Thailand and India were closed today.