Business Sentiment in Japan Decline

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

Business sentiment dropped as large and small comanies worry about the export market and consumer spending in the three months to June. Sentiment at smaller companies declined the most. In the stocks market financials stocks declined as more analysts voice additional write downs at the U.S. banks and brokerages. Mitsubishi Estate and Daikyo lowered prices for condominiums in Tokyo.

[R]5:00AM New York, 7:00PM Tokyo - Business sentiment falls in the quarter to June. Government considers slashing corporate taxes.[/R]

Japan stocks fell fractionally today after a government report showed that business sentiment dropped in the three months between to June.

Lingering inflation worries also helped to dampen investor sentiment as oil prices continued to climb, while analysts bet that lenders might incur more asset write downs.

Market sentiment

In Tokyo trading Nikkei 225 fell 0.61% or 84.61 at 13,857.47, and the broader Topix Index dropped 0.7% or 8.81 at 1,347.93.

In the first section of the Tokyo Stock Exchange 18 billion shares worth 1.9 trillion yen were traded and in the second section 404 million shares worth 6.7 billion yen changed hands.

Of the Nikkei 225 stocks 60 gained, 52 declined, and 13 were unchanged. GS Yuasa Corp. led advancers in the index shares with a rise of 6.65% followed by Sumitomo Heavy Industries increasing 4.42%.

Business sentiment falls

The Cabinet Office reported today on its Website that business sentiment for all large enterprises dropped to minus 15.2 points in the quarter to June and is forecasted to rise to 3.7 points in July to September.

Sentiment for all medium-sized companies fell to minus 18.1 points but is projected to ease to minus 5.7 points in July to September, while sentiment for small enterprises declined to minus 36.5 points in the three months to June.

Similarly, business sentiment for large manufacturing companies fell to minus 15.1 points in the April to June period and is projected to jump to 5.3 points in the three months to September. Medium sized manufacturing enterprises’ sentiment declined to minus 16.4 points and is forecasted to dip minus 5.7 points in July to September.

Sentiment for small manufacturing enterprises plummeted to minus 37.5 points in the April to June period and the cabinet office expects sentiment to slow to minus 24.7 points in the next three months.

In addition, the survey indicates that business sentiment for large-non manufacturing companies declined to minus 15.3 points in the three months ended June and is forecasted to advance 2.8 points in the July to September period.

For medium non-manufacturing companies, sentiment plunged to minus 18.6 points and is projected to edge down to minus 5.8 points in the three months ended September.

Japan mulls cutting corporate tax

Bloomberg news reported on its Website today that according to a draft on economic and fiscal policy released last week the Japanese government is considering slashing corporate tax, which currently stands at 40.7%, to cut business costs and attract foreign investment.

The draft will also consider measures to encourage local companies to remit profits earned abroad and restrict “foreign investment on the grounds of national security”. The final 2008 policy draft will be forwarded to Prime Minister Yasuo Fukuda this month.

Statistics from the Cabinet Office shows that foreign direct investment in Japan was 3% of GDP last year.

Gainers & Losers

GS Yuasa Corp. led advancers in the Nikkei 225 index shares with a rise of 6.65% followed by rises in Sumitomo Heavy Industries of 4.42%, in Nippon Soda Co. of 4.32%, in Nitto Boseki Co. of 4.04%, and Sanyo Electric of 3.01%.

T&D Holdings led decliners in the Nikkei 225 index shares with a drop of 6.28% followed by losses in Chuo Mitsui Trust of 4.35%, in Sompo Japan Insurance of 4.32%, in Mitsui Sumitomo Insurance Group of 4.09%, and Mitsubishi Estate Co. of 4.02%.

Mitsubishi Estate Co. fell on news property companies will cut condominium prices. Daikyo Inc also proposed to cut the prices of unsold condominiums by 5% to 10%.

Financial stocks declined after UBS AG reported that Citigroup may have to take additional $8.7 billion in asset write downs in the current quarter.

In addition, Lehman Brothers Holdings Inc. projected that second quarter asset write downs for UBS and Deutsche Bank AG will top $8.5 billion. Mizuho Trust & Banking shed 3.02%.