Tokyo Stocks: 12th Day of Losses

123jump.com Staff
04 Jul, 2008
New York City

Stocks in Tokyo trading fell for the 12th day in a row. Persistent worries related to exports to the U.S., rising inflation and weak consumer sentiment drag market averages lower for the longest streak in five decades. For the week Nikkei 225 index dropped 2.3% and in the last twelve days the index declined 8.4%. Real estate stocks led the decliners. Tokai Carbon soared 12% and GS Yuasa rose 4.9%, led the gainers in the Nikkei 225 index.

[R]5:00AM New York, 7:00PM New York - Nikkei drops 2.3% for the week. Tokia Carbon soared 11%.[/R]

Stocks in Japan fell for the twelfth consecutive trading session totaling 8.4% in the period, longest in the 54 years. Realty stocks tumbled on lingering credit market worries.

Market Sentiment

In Tokyo trading Nikkei 225 declined 0.21% or 27.51 at 13,237.89, falling 2.3% for the week, and the broader Topix Index shed 0.01% or 0.14 at 1,297.88, declining 1.7% in the week.

In the first section of the Tokyo Stock Exchange 18 billion shares worth 1.9 trillion yen were traded and in the second section 298 million shares valued at 5 billion yen changed hands.

Of the Nikkei 225 stocks 12 rose, 201 declined, and 12 were unchanged. Tokai Carbon Co. led gainers in the index shares with a rise of 11.42% after raising electrode prices for export by about 70% on increasing demand in emerging markets.

Companies Forestall Recession

Bloomberg News reported on its Web site today that Economy and Fiscal Policy Minister Hiroko Ota said in an interview that strong corporate growth in Japan has been able to forestall a recession this year as global turmoil continues to take its toll on the financial markets.

She added that companies have been able to buttress their position by shedding debt, slashing “bloated workforces” and getting rid of extra capacity. Government believes that the country doesn’t have the risk of secondary inflation due to stalled wage growth.

According to Ota, inefficiency among service companies is preventing them from increasing wages, which has negatively impacted on consumer spending.

Caution over Corporate Tax Revision

The online edition also reported that Japan’s new vice finance minister Kazuyuki Sugimoto said today the Government needs to take into account the country’s precarious fiscal situation before it slashes corporate taxes. Currently Japan’s company tax at 40.7% is the highest among the G8 countries.

Sugimoto said corporate tax base and health care costs must be reviewed together when discussing the tax.

Gainers & Losers

Tokai Carbon Co. led advancers in the Nikkei 225 index shares with a rise of 11.42% followed by increases in GS Yuasa Corp. of 4.84%, in Taiyo Yuden of 4.70%, in Mazda Motor of 4.56%, and Sumitomo Heavy Industries of 4.15%.

Tokai Carbon Co. rose after reporting today that it will raise the electrode prices for export by about 70% on rising demand in emerging markets.

Asahi Breweries led decliners in the Nikkei 225 index shares with a fall of 4.33% followed by losses in Tokyu Land Corp of 4.12%, in Secom Co. Ltd of 3.79%, in Pioneer Corp. of 3.51%, and Sumitomo Realty of 3.04%.

Asahi slumped after Morgan Stanley cut the rating on the company’s stock from “overweight” to “equal weight.”

Realty stocks fell on lingering worries of global market losses.

World Markets Review

The Nikkei 225 Index in Tokyo closed lower 27.51 or 0.21% to 13,237.89, Hang Seng index in Hong Kong increased 181.04 or 0.85% closed to 21,423.82. ASX 200 index in Australia increased 83.80 or 1.68% to close 5,082.10. The KL Composite index in Malaysia decreased 19.56 or 1.70% closed to 1,134.14.

The Kospi Index in South Korea decreased 28.60 or 1.78% to close at 1,577.94, SET index in Thailand closed higher 0.88 or 0.12% to 743.03 and JSE Index in Indonesia increased 28.14 or 1.23% to 2,314.75. The Sensex index in India increased 359.89 or 2.75% to 13,454.00.

The FTSE 100 Index in London closed lower 60.50 or 1.10% to 5,416.10, in Paris CAC 40 Index in decreased 62.44 or 1.44% to 4,281.55 and DAX Index in Germany closed lower 71.11 or 1.12% to 6,282.63. The SMI Index in Switzerland decreased 89.76 or 1.31% to close at 6,754.30.