Tokyo Stocks Lower, Debt Rating Raises

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

Japan stocks declined for the eighth day in a row as global credit market worries and rising crude oil prices affect trading sentiment. Moodys raised its rating on sovereign debt of Japan and cited restrained spending by the government. Japan also eliminated taxes on off-shore funds to attract foreign asset managers. Steel stocks in Japan rose higher after Posco of Korea and ArcelorMittal of Europe raised stakes in Macarthur Coal of Australia.

[R]5:00AM New York, 7:00PM Tokyo - Japan scraps tax for offshore funds. Moody’s raises Japan’s credit rating.[/R]

Stocks in Japan declined for the eighth straight trading session as caution ahead of the Tankan Survey dampened investor sentiment. Commodity stocks however trimmed losses as crude oil prices rose and metals gained.

Market sentiment

In Tokyo trading Nikkei 225 fell 0.46% or 62.98 at 13,481.38, dropping 6% for the month and 11.9% in the first half, and the broader Topix Index shed 0.04% or 0.58 at 1,320.10, falling 6.3% for the month.

In the first section of the Tokyo Stock Exchange 7.7 billion shares worth 860 billion yen were traded and in the second section 218 million shares worth 2.8 billion yen changed hands.

Of the Nikkei 225 stocks 109 gained, 104 declined, and 12 were unchanged. Nippon Oil Corp led advancers in the index shares with a rise of 7.38% after crude oil prices increased 1.2% to $141 per barrel today.

Moody’s Raises Japan Rating

Bloomberg News reported today that Moody’s Investors Service raised Japan’s local currency debt from A1 to Aa3 on “expectations of continued fiscal restraint and consolidation, coupled with an easing-out of the debilitating effects of deflation”.

The ratings agency also added that Japan’s economy will withstand the global slowdown and didn’t expect any pre-emptive interest rate rises. Moody’s last raised Japan’s rating to A1 eight months ago.

Offshore funds Welcome

The Financial Times reported today that Japan’s Financial Services Agency, the Ministry of Finance and the National Tax Agency have agreed that offshore funds will not be subject to taxes if their assets in Japan are managed by independent asset managers.

The move is being taken in order to encourage fund managers “to do business in Japan”.

Posco and Arcelor Raise Stakes in Macarthur

Posco reported today that it has agreed to buy a 10% stake in Macarthur from the Australian group’s shareholder Ken Talbot at A$20 a share.

Separately, Macarthur Coal reported on its Website today that ArcelorMittal has increased its shareholding in the company from 14.9% to 19.9% through the purchase of a 5% interest from Talbot Group Holdings.

The shares were purchased at A$20 each and transaction is subject to Foreign Investment Review Board approval.

Macarthur Coal Chairman Keith De Lacy commented, “The company is currently making inquiries about the article on page 22 of today’s Financial Review regarding rumors that Mr Ken Talbot may sell his shares to Korean steel giant Posco and will inform the market as soon as it is aware of any relevant information.”

Gainers & Losers

Nippon Oil Corp led advancers in the Nikkei 225 index shares with a rise of 7.38% followed by increases in Show Denko KK of 6.02%, in Mitsubishi Rayon Co. of 6.01%, in Nippon Suisan Co. of 5.25%, and Nippon Sheet Glass of 4.79%.

Nippon Oil Corp. rose after crude oil prices for August delivery gained 1.2% to $141.93. Other commodity stocks gained as well. Sumitomo Metal Mining increased 2.78%, Inpex advanced 4.69% and Nippon Mining House edged up 3.58%.

Steelmakers spiked on the news that ArcelorMittal has increased its shareholding in Macarthur. JFE Holdings climbed 3.28% and Kobe Steel jumped 3.05%.

GS Yuasa Corp. led decliners in the Nikkei 225 index shares with a drop of 5.93% followed by losses in Isetan Mitsukoshi of 5.56%, in Meidensha Corp. of 5.06%, in Fuji Heavy Industries of 4.59%, and Taiyo Yuden Co of 4.36%.

Exporters fell after the yen gained to 105.16 from 107.09 on Friday last week. Sony dropped 2.27% and Toyota Motor Company slid 1.18%.