Realty Stocks Surge in Tokyo

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

Realty stocks in Japan surged after comments from Mori Building suggested that office space rents may increase in Japan as much as 10%. The company also projected a rise in profit of 43% from a year ago as it completes the tallest office building in Shanghai. Japan and China are expected to announce a production sharing and gas field development project. GS Yuasa surged 12% on the speculation that rising energy prices will increase demand for battery operated cars.

[R]5:00AM New York, 7:00PM Tokyo - GS Yuasa Corp leads Tokyo higher. Citigroup starts withdrawing from consumer finance business. Realty stocks rise.[/R]

Stocks in Japan rose marginally led by GS Yuasa Corp., the leading battery and power supply system makers, in a lackluster trading in stocks. Realty stocks led the gainers after comments from Mori Building. The largest real estate company estimated net income increase of 43% from a year ago and Nikkei News reports that the rents in Japan at buildings controlled by Mori are likely to rise 10%.

Mori Building is likely to finish tallest building in China, Shanghai World Financial Center before the end of the current year. The building is 492 meter tall with 381,600 square meters of office space on 101 floors.

Market sentiment

In Tokyo trading Nikkei 225 rose 0.73% or 104.45 at 14,452.82, and the broader Topix Index gained 0.6% or 7.66 at 1.409.64.

In the first section of the Tokyo Stock Exchange 8.4 billion shares worth 901 billion yen were traded and in the second section 189 million shares valued at 4.9 billion yen changed hands.

Of the Nikkei 225 stocks 154 gained, 61 declined, and 10 were unchanged. GS Yuasa led advancers in the index shares with a rise of 12.48% followed by NGK Insulators increasing 6.49%.

BOJ maintaining vigilance

The Bank of Japan reported on its Web site today in minutes on the monetary policy meeting held on May 19 and 20indicated that the central bank will be vigilant and monitor developments in overseas economies, global financial markets and higher energy and material costs.

On the overall, the committee agreed that economic growth will slow for the time being, but will “follow a moderate path thereafter”.

Japan, China in joint gas project

Japan and China will today announce an accord to jointly develop the gas fields in the East China Sea according to several reports in the local media. The deal was scheduled to be announced at an evening press conference by Foreign Minister Masahiko Komura and Economy, Trade and Industry Minister Akira Jiji.

According to the report, Japan will invest in China’s existing production at the Chunxiao gas field and get resources that are proportionate to its financial contribution.

The Sankei daily also reported that the two countries will form a 50-50 joint venture to develop the Longjing field.

Gainers & Losers

GS Yuasa Corp. led advancers in the Nikkei 225 index shares with a rise of 12.48% followed by rises in Furukawa Co. Ltd of 6.49%, NGK Insulators of 6.39%, in Japan Steel Work of 5.30%, and Tokai Carbon Co. of 4.35%. Battery makers rose on speculation that the rising oil prices will increase the demand for electric cars.

NEC Electronics surged 16% to 2,971 yen after Goldman Sachs raised its rating to ‘buy’ from ‘neutral’ and estimated that rising chip sales for mobile phones will increase quarterly earnings. The parent company NEC Corp 4% to 605 yen after it settled with the U.S. Securities and Exchange Commission for failing to file the annual report. The company was delisted from the Nasdaq Stock Market nine months ago. The company will not be required to pay a fine.

Realty stocks advanced after Mori Building forecasted that operating profit will rise by 23%, while pretax profit is projected to rise by 43%.

The Nikkei news also reported that the company will increase rents of its office buildings by 10%. Mitsubishi Estate Co. edged up 2.81% and Tokyu Land Corp jumped 1.74%.

Mitsui Sumitomo Insurance Group Holdings led decliners in the Nikkei 225 index shares with a drop of 3.54% followed by declines in Kajima Corp. of 3.04%, in Sompo Japan Insurance of 2.33%, in Marui Group of 1.95%, and First Retailing of 1.91%.

Financial stocks fell after Goldman, Sachs & Co. said U.S. banks will need to raise $65 billion in new capital as declining home prices continue to feed the deterioration in the credit markets. Mitsubishi UFJ shed 0.28% and Resona Holdings fell 1.10%.

Citigroup offers 1,350 employees early retirement

Citigroup offered 1,350 employees at its consumer finance unit early retirement. The report noted that the offer was made in a memo distributed to all employees on June 16. However the CFJ labour has since rejected the proposal, according to news first reported in Bloomberg and confirmed by a local source in Tokyo.

The company earlier reported that it will shut down 32 consumer finance branches and 540 automated loan machines in Japan and transfer capital to more profitable areas.

Asian markets review

In Tokyo Nikkei 225 Index closed higher 104.45 or 0.73% to 14,452.82, in Hong Kong Hang Seng index increased 267.81 or 1.16% closed to 23,325.80. In Australia ASX 200 index higher 20.50 or 0.38% to close 5,443.20. In Malaysia KL Composite index decreased 15.17 or 1.24% closed to 1,212.59.

In South Korea Kospi Index increased 23.42 or 1.34% to close at 1,774.13, in Thailand SET index closed lower 11.43 or 1.47% to 765.74 and Indonesia JSE Index edged decreased 13.40 or 0.56% to 2,364.58. Sensex index in India decreased 274.59 or 1.75% to 15,422.31.