The Rising Yen Hits Exporters in Japan

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

The ongoing concern over inflation persisted in Japan as oil prices remained high. The Nikkei 225 index dropped 322.01 points, or 2.3% to 13,690.19. Crude oil futures increased to a record above $135 a barrel last week and were trading above US$133 a barrel in Asian electronic trading late Monday. Sony Corp. declined 2.6% while electronics maker Kyocera Corp. slid 2.1%. The dollar was trading at 103.31 yen Monday afternoon. Major exporters lost ground with Canon down by 3.3%, to 5,260 yen.

[R]5:00AM New York, 7:00PM Tokyo - Rising oil prices and U.S. housing slump affects stocks.[/R]

Stocks in Japan fell as rising crude oil and commodity prices raised the spectre of mounting inflationary pressures on the economy. The rising yen also negatively impacted exporters.

Market sentiment

In Tokyo trading, Nikkei 225 dropped 2.3% or 322.01 to 13,690.19, and the broader Topix Index fell 2.4% or 32.51 to 1,344.18.

In the first section of the Tokyo Stock Exchange 8.6 billion shares worth 935 billion yen were traded and in the second section 312 million shares valued at 5.1 billion yen changed hands.

Of the Nikkei 225 stocks 12 gained, 212 declined, and 1 was unchanged. Chiyoda Corp. led the advancers in the index shares with a rise of 4.66% followed by Yahoo Japan Corp. increasing 4.56% after the company reported that it will spend 60 billion yen to buy back 2% of its total shares.

Japanese firms lose $3.2 billion in cross shareholdings

Bloomberg news reported today that Nomura Holdings Inc. strategist Kengo Nishimaya said Japanese companies lost $3.2 billion in cross shareholdings in the last fiscal year, with companies posting securities losses rising to 130 from 13 in the comparable period a year ago.

According to the report, Mitsui & Co. lost $354 million on stockholdings and missed its profit projections, while Hikari Tsushin lost $220 million from a slump in its stake in consumer lender SFCG Co.

Cross-shareholdings are mainly used by Japanese companies to buttress strategic relationships and forestall hostile takeovers.

Gainers & Losers

Chiyoda Corp. led advancers in the Nikkei 225 index shares with a rise of 4.66% followed by rises in Yahoo Japan Corp. of 4.56%, in Kumagai Gumi Co. of 3.60%, in Mitsubishi Paper of 1.31%, and Hokuetsu Paper of 1.16%.

Yahoo Japan Corp. rose after reporting that it will spend 60 billion yen in buying back 2% of its total shares.

Sanyo Electric led decliners in the Nikkei 225 index shares with a fall of 6.77% followed by losses in Mitsumi Sumitomo of 5.67%, in Bridgestone Corp. of 5.55%, in T & D Holdings Inc. of 5.31%, and Kawasaki Heavy Industries of 5.23%.

Sanyo Electric fell after crude oil prices rose 0.5% to $132.87 a barrel today.

Bridgestone Corp. fell after rubber gained 3.4% to 330.3 yen a kilogram as China Stockpiles fell by 29% to 25,200 metric tons. Yokohama Rubber also slipped 3.07% as well.

Similarly, automakers were affected by rising rubber prices. Honda Motor Corp. shed 3.29%, Mazda Motor fell 4.56% and Nissan Motor Corp. declined 2.67%.

Merrill Lynch & Co also downgraded Nissan Motor Corp. to “neutral” from “buy”.

Exporters fell as the yen rose to 103.06 from 104.06 last Friday against the dollar. Casio Computers plummeted 3.19% and Sharp fell 3.03% as a result.

US Existing home sales fall 1% in April

The National Association of Realtors of US reported on Friday last week that existing home sales, including single-family, townhouses and co-ops, fell 1% to a seasonally adjusted rate of 4.89 million units in April from a revised 4.94 million in March as tight lending guidelines hampered home buyers.

The figure is 17.5% below the 5.93 million-unit level in April 2007.

NAR noted that the median existing-home price for all housing types declined 8% from $219,900 a year ago to $202,300 in April.

Total housing inventory at the end of April increased 10.5% to 4.55 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.0-month supply in March.

In addition, single-family home sales declined 0.5% to a seasonally adjusted annual rate of 4.34 million in April from 4.36 million in March.

However, NAR President Richard F. Gaylord said less restrictive mortgage options will see an upturn of home sales this summer.

http://www.realtor.org/rmodaily.nsf/pages/News2008052301

http://www.bloomberg.com/apps/news?pid=20601101&refer=japan&sid=akgw6DPNA0H4