Financials Struggle in Japan

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

Japan stock indexes declined after Lehman Brothers cuts its rating for the financial services sector in the wake of rising credit costs. Falling crude oil and metal prices widened losses. In Tokyo trading Nikkei 225 fell 0.65% or 94.45 to 14,341.12, and the broader Topix Index dropped 0.4% or 6.02 at 1,424.45.

[R]5:00AM New York, 7:00PM Tokyo – Financial stocks declined on the on-going worries related to asset write-outs at Japanese banks.[/R]

Japan stock indexes declined after Lehman Brothers cuts its rating for the financial services sector in the wake of rising credit costs. Falling crude oil and metal prices widened losses.

Market sentiment

In Tokyo trading Nikkei 225 fell 0.65% or 94.45 to 14,341.12, and the broader Topix Index dropped 0.4% or 6.02 at 1,424.45.

In the first section of the Tokyo Stock Exchange 11.9 billion shares worth 1.1 trillion yen were traded and in the second section 297 million shares valued at 4.7 billion yen changed hands.

Of the Nikkei 225 stocks 89 gained, 125 declined and 11 were unchanged. Nitto Boseki Co. led advancers in the index shares with a rise of 7.66% followed by Yokohama Rubber gaining 6.99%.

Lehman Brothers cut rating on financial sector

Lehman Brothers today lowered its view on the financial services industry to ``negative'''' from ``neutral’’ on increasing credit costs, and further cut its share price estimate for Mitsubishi UFJ to 820 yen from 870 yen.

Also, the brokerage lowered its target for Mizuho to 380,000 yen from 410,000 yen.

Moody’s may cut ratings on MBIA and Ambac Financial Group

Moody’s Investor Services said yesterday it is reviewing its ‘AAA’ insurance financial strength ratings on MBIA and Ambac Financial Group that is likely result in a downgrade.

Moody’s noted, “MBIA''s new business volume has been severely hampered by heightened uncertainty surrounding mortgage-related portfolio losses and the impact that such losses could have on the company''s claims-paying ability.""

The rating agency added that despite raising $1.5 billion new capital in March, Ambac’s financial flexibility has deteriorated.

Gainers & Losers

Nitto Boseki Co. led advancers in the Nikkei 225 index shares with a rise of 7.66% followed by increases in Yokohama Rubber of 6.99%, in Toyobo Co. Ltd of 6.05%, in Mitsui Chemicals of 5.58%, and NGK Insulators of 5.10%.

Shipping lines increased after the Baltic Dry Index rose 3.4% yesterday. Kawasaki Kisen advanced 0.96% and Mitsui OSK Lines rose 2.62%.

Konica Minolta led decliners in the Nikkei 225 index shares with a fall of 5.74% followed by losses in Tokyu Land Corp. of 5.31%, in Nippon Oil Corp. of 4.74%, in GS Yuasa Corp. of 4.44%, and Sumitomo Realty of 4.42%.

Tokyu Land Corp fell on tightening credit conditions on the financial markets. Mitsubishi Estate Co. fell 3.24% as well.

Nippon Oil Corp declined as crude oil for July delivery dropped 1.6% to $122.30 a barrel in New York yesterday after the U.S. inventories unexpectedly increased last week.

India and Malaysia also cut fuel subsidies, fueling speculation this might dampen demand for crude oil. Inpex Holdings fell 3.10% on the news.

Financial stocks also edged down after Lehman Brothers downgraded stocks in the sector. Mitsui & Co shed 4.27%, Mizuho declined 3.68% and Mizuho Trust & Banking plummeted 2.82%.

Inpex to spend $19.7 billion on LNG project in Indonesia

Bloomberg news reported today that Indonesia’s chairman of the regulator BPMigas R. Priyono said yesterday Inpex plans to invest $13.5 billion to develop the Masela gas reserves in the Timor Sea area and construct facilities to process and export fuel.

An additional $6.2 billion is earmarked for the operation of the plant. Last week Inpex said the company is in the process of confirming the field’s gas estimates through an independent audit.