Tokyo Stocks Fall for the Fourth Week

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

Stocks in Japan fell on Friday and dropped 1.8% for the week. The fourth monthly declined was led by persistent weakness in financials, exporters and energy related stocks. Japan estimates its primary budget deficit to rise to 4 trillion by the end of fiscal 2011 from the previous estimate of 700 billion yen. Fall in crude oil futures for the third day in a row prompted a rise in chemical and tire manufacturers and a drops in refiners and oil importing companies.

[R]5:00AM New York, 7:00PM Tokyo - Japan’s primary budget deficit to increase to 4 trillion yen by 2011.[/R]

Japan stock indexes dropped after oil prices fell for the third day in a row and talks of $10 billion offering from Freddie Mac in the U.S. Exporters, financials and energy companies were among the most active stocks. Refiner Inpex dropped fell for the third day in a row tracking losses in the oil future prices. Real estate developers declined as well.

Market Sentiment

In Tokyo trading Nikkei 225 declined 0.65% or 84.25 at 12,803.70, falling 1.8% for the week, and the broader Topix Index declined 0.9% or 11.22 at 1,252.43, shedding 2.6% in the week.

In the first section of the Tokyo Stock Exchange 17 billion shares worth 1.9 trillion yen were traded and in the second section 243 billion shares valued at 4.5 billion yen changed hands.

Of the Nikkei 225 stocks 69 rose, 141 declined, and 15 were unchanged. Mitsui Chemicals led advancers in the index shares with a rise of 5.59% followed by Fujikura Ltd increasing 4.97%.

Freddie Mac May Raise $10 billion

The second largest mortgage lender in the U.S., Freddie Mac is planning to raise $10 billion through a sale of preferred stocks. The preferred stock may pay higher dividend rate and increase the future cash outflow for the company.

The two largest U.S. mortgage lenders Fannie Mae and Freddie Mac own or guarantee about $5.2 trillion of home mortgages and fulfill the mission of mortgage lending set by the U.S. Congress. The troubled lenders may have to raise as much as $80 billion in capital if they were to match the capital required by a commercial bank in the U.S. Two lenders have less than 2% of its capital from shareholders and 98% are borrowed funds, while a commercial bank needs at least 6% of its capital from stock holders.

Japan Budget Deficit to Soar

Kyodo News reported on its Web site today that the cabinet office has reviewed its forecast for combined primary deficit of national and local governments in fiscal 2011 to 4 trillion yen from 700 billion that was earlier projected.

Japan is currently finalizing its forecasts to a meeting of the Council on Economic and Fiscal Policy on Tuesday next week. Chief Cabinet Secretary Nobutaka Machimura noted that it is increasingly difficult for the government to achieve its set target for a surplus in fiscal 2011, ending March 2012.

The report added that the balance is computed annually to gauge how much national and prefectural governments can foot expenditures with non-bond revenues. Also the cabinet office is believed to be at the final phase of intra-government adjustments to revise the projection of the gross domestic product down to 1.3% from the earlier forecasted 2% and the nominal GDP to 0.3% from 2.1% projected before.

Gainers & Losers

Mitsui Chemicals led advancers in the Nikkei 225 index shares with a rise of 5.59% followed by increases in Fujikura Ltd of 4.97%, in IHI Corp. of 4.64%, in Mitsubishi Chemicals of 4.55%, and Meidensha Corp of 4.05%.

Mitsui Chemicals and other chemical companies rose as oil prices dropped.

Bridgestone Corp edged up 2.52% and Hokuetsu Paper rose 2.18% also on easing oil prices, which have declined by $15 for the past three days.

Isuzu Motors led decliners in the Nikkei 225 index shares with a fall of 4.72% followed by losses in Tokyu Land Corp of 4.70%, in Chiyoda Corp of 3.64%, in Kajima Corp of 3.46%, and Inpex Holdings of 3.42%.

Commodity stocks fell on easing energy prices. Mitsubishi Corp slumped 2.54% as a result.

Financial stocks slid as well. Mizuho Financial Group plunged 2.21% and Mizuho Trust & Banking slipped 2.87%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 84.25 or 0.65% to 12,803.70, Hang Seng index in Hong Kong increased 139.47 or 0.64% closed to 21,874.19. ASX 200 index in Australia decreased 60.60 or 1.24% to close 4,840.40. The KL Composite index in Malaysia decreased 16.13 or 1.44% closed to 1,105.04.

The Kospi Index in South Korea decreased 15.57 or 1.02% to close at 1,509.99, SET index in Thailand closed lower 5.45 or 0.81% to 664.52 and JSE Index in Indonesia decreased 26.58 or 1.23% to 2,141.14. The Sensex index in India increased 523.55 or 3.99% to 13,635.40.