Financials Drag Nikkei Index Lower

123jump.com Staff
03 Jun, 2008
New York City

Japan stock indexes traded in negative territory after a rising yen affected exporters and realty stocks plummeted on signs of tightening credit markets. In Tokyo trading Nikkei 225 declined 1.6% or 230.97 at 14,209.17, and the broader Topix Index fell 1.2% or 17.66 at 1,407.44. Subprime losses from the US loans at Japanese financial companies total 1.8 trillion yen at the end of March 2008 quarter.

[R]5:00AM New York, 7:00PM Tokyo - Subprime losses from the US loans at Japanese financial companies total 1.8 trillion yen.

Japan stock indexes traded in negative territory after a rising yen affected exporters and realty stocks plummeted on signs of tightening credit markets.

Market sentiment

In Tokyo trading Nikkei 225 declined 1.6% or 230.97 at 14,209.17, and the broader Topix Index fell 1.2% or 17.66 at 1,407.44.

In the first section if the Tokyo Stock Exchange 9.9 billion shares worth 1.1 trillion yen were traded and in the second section 241 million shares valued at 5.9 billion yen changed hands.

Of the Nikkei 225 stocks 27 gained, 194 declined, and 41 were unchanged. GS Yuasa led advancers in the index shares with a rise of 8.69% followed by IHI Corp gaining 3.61%.

Standard & Poor cuts 3 Wall Street banks

Standard & Poor announced in a statement yesterday that it has slashed its rating of Lehman Brothers, Merrill Lynch and Morgan Stanley, adding that the outlook for large financial institutions in the U.S. is “now predominantly negative"""".

The credit rating agency said it might downgrade Wachovia Bank and revised outlooks on Bank of America Corp and J.P. Morgan Chase Co to negative.

However S&P removed Citigroup from the negative credit watch list and observed, “The negative actions reflect prospects of continued weakness in the investment banking business and the potential for more write-offs, though not of the magnitude of those of the past few quarters.""""

Separately, Wachovia Corp yesterday ousted its chief executive officer Kennedy Thompson after growing losses from an ill-timed purchase of subprime lender Golden West Financial in 2006.

Japanese financial institutions lose 1.8 trillion yen in subprime woes

The Yomiuri Daily online reported today that Japanese financial institution’s losses topped 1.8 trillion yen from subprime loans and losses related to turmoil in the market as of March 31.

According to the report, losses of 1.6 trillion yen resulted directly from the subprime lending in the U.S.

Mizuho Financial Group incurred the largest loss among all financial institutions in Japan with a loss of 645 billion yen and 40% of the all loss suffered by the Japanese financial institutions followed by losses at Nomura Holdings Inc of 258 billion yen.

Losses at Sumitomo Mitsui Financial Group and the Mitsubishi UFJ Financial Group so far total 123 billion yen.

Gainers & Losers

GS Yuasa led advancers in the Nikkei 225 index shares with a rise of 8.69% followed by gains in IHI Corp. of 3.61%, in Mitsubishi Heavy Industries of 3.30%, in Kubota Corp. of 2.09%, and Sompo Japan Insurance of 1.98%.

Kajima Corp. led decliners in the Nikkei 225 index shares with a drop of 5.05% followed by losses in JGC Corp. of 4.94%, in Taisei Corp. of 4.64%, in Hokuetsu paper of 4.56%, and Sekusui House of 4.19%.

Kajima Corp. fell after Credit Suisse downgraded the stock from “outperform” to “neutral”.

Realty stocks fell on signs that the credit markets are tightening after Standard & Poor cut its rating on Morgan Stanley, Merrill Lynch and Lehman Brothers. Sumitomo Realty shed 3.69% and Mitsui Fudosan tumbled 3.23% as a result.

Exporters also fell as the yen rose to 104.32 from 105.43 against the dollar yesterday. Sony edged down 2.90%, Canon slumped 2.25% and Bridgestone plunged 1.70%.