Tokyo Stocks Fall, Weak Toyota Outlook

123jump.com Staff
08 May, 2008
New York City

Stocks in Japan tracked weakness in the U.S. and closed lower. Financial stocks fell the most on the worries that more losses may have to be taken on the new disclosure requirements from the U.S. regulatory agency SEC. Nikkei 225 index fell 1.3% to 13,943. Toyota Motor reported 9.8% rise in sales and 4.5% in earnings but offered lower sales and earnings outlook for the current year.

[R]5:00AM New York, 7:00PM Tokyo – Stocks in Japan fell and weakness in financial sector. Toyota dropped on weak sales outlook.[/R]

Stocks in Japan declined after the U.S. National Association of Realtors said pending home sales declined in March and on news by the U.S. Securities and Exchange Commission that banks and brokers will be required to disclose their capital position in greater details beginning in 2009.

In Tokyo trading Nikkei 225 declined 1.13% or 159.22 to 13,943.26, and the broader Topix Index fell 1.5% or 20.33 at 1,372.95.

In the first section of the Tokyo Stock Exchange 8.6 billion shares worth 1trillion yen were traded and in the second section 235 million shares valued at 7.1 billion yen changed hands.

Of the Nikkei 225 stocks 57 gained, 161 declined, and 7 were unchanged. CSK Holdings Corp led advancers in the index shares with a rise of 9.2%.

Toyota revenue and earnings rise but offered weak revenue and earnings outlook

Toyota Motor Corporation reported for the fiscal year ending in March 2008 revenue increased 9.8% to 26.29 trillion yen (or $262 billion) from a year ago. Net income in the period rose 4.5% to 1.72 trillion yen. The company also announced cash dividend of 140 yen per share, an increase of 20% from a year ago. The dividend payout ratio improved to 25.9% from 23.4% a year ago and the company has targeted 30% as dividend payout ratio.

In fiscal year 2008, Toyota''s consolidated sales reached 8.91 million units, an increase of 389 thousand units over the last fiscal year. In Japan, vehicle sales decreased by 85 thousand units over the last year, to 2.19 million units. In North America, vehicle sales reached 2.96 million units, an increase of 16 thousand units.

Toyota lowered its consolidated financial forecast for the fiscal year ending March 31, 2009. Based on an exchange rate of 100 yen to the U.S. dollar and 155 yen to the euro, Toyota estimated consolidated net revenues of 25.00 trillion yen, operating income of 1.60 trillion yen and net income of 1.25 trillion yen.


Flat pattern on U.S. home sales activity to continue

The National Association of Realtors in the U.S. reported yesterday that the flat pattern in home sales activity is expected to persist, adding that the Pending Home Sales Index fell 1% to 83 in March from a downwardly revised 83.8 in February. The index declined 20.1% from a year earlier.

Existing-home sales are forecasted to increase from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter, and for all of 2008 existing-home sales are likely to total 5.39 million. Sales are then expected to rise 6.1% to 5.72 million next year.

According to the NAR report, sales of new homes are expected to fall 30.9% to 536,000 this year before rising 10.1% to 590,000 in 2009, while housing starts, including multifamily units, will probably drop 29.5% to 955,000 in 2008, and then rise 1.3% to 967,000 next year.

Also the median new-home price is estimated to fall 3.7% to $238,000 this year, but increase 5.4% in 2009 to $250,900.

NAR President Richard F. Gaylord believes that increasing costs are putting a dent on prospects for recovery.


U.S. Securities and Exchange Commission demands capital and liquidity disclosure

The Chairman of the U.S. Securities and Exchange Commission Christopher Cox said in a speech yesterday that there will be more disclosure of actual capital and liquidity positions of the CSE (Consolidates Supervised Entities) firms “in terms that the market can readily understand and digest.”

Cox added that the CSEs will institute public disclosure of their capital ratios computed under the Basel Standard later this year, and then phase in additional disclosure related to concentration of exposures.

SEC action appears to lag significantly in the wake of large losses at banks and brokerage houses. Financial institutions have taken provision of more than $320 billion, the largest potential losses since the Great Depression. SEC has been largely since either lacking resources or lagging behind the market developments.

Gainers & Losers

CSK Holdings led advancers in the Nikkei 225 index shares with a rise of 9.17% followed by increases in Clarion Co. Ltd. of 7.58%, in Nippon Light Metal of 4.97%, in Nitto Boseki Co. of 3.57%, and Ricoh Co. Ltd of 3.27%.

Showa Denko KK led decliners in the Nikkei 225 index shares with a drop of 11.92% followed by losses in Yahoo Japan Corp. of 5.36%, in Sumitomo Trust & Banking of 4.97%, in Fujikura Ltd of 4.91%, and Tokyu Corp of 4.61%.

Mizuho Financial Group fell 4.51%, Mitsubishi UFJ Financial Group shed 3.71% and the Bank of Yokohama edged down 4.10%.

Softbank to issue nonvoting preferred stock

Nikkei news reported that Softbank Corp. is mulling plans to issue nonvoting preferred stock, shares with no voting rights but higher dividends, in order to diversify its funding sources and attract more individual stockholders. Softbank Corp fell 3.32%.