Weak Wages, Earnings in Japan

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

Stocks in Japan traded in a tight range after wages declined for the first time this year in June. Nintendo reported first quarter profit rise of 34% to 107 billion yen and sales increased 24% to 423 billion yen. The company cut its annual earnings outlook by 26% to 325 billion yen. Taked Pharmaceuticals reported first quarter profit decline of 98% and but projected full-year profit rise of 25% to 200 billion yen.

[R]5:00AM New York, 7:00PM Tokyo - Japan wages drop 0.6% in June. Nintendo lowered full-year profit estimate by more than 25%.[/R]

Stocks in Japan traded between gains and losses to rise fractionally at close as a rise in commodity stocks and utilities helped to offset a government report that showed wages fell for the first time this year in June. A spate of negative earnings and forecasts from Nintendo and Denso Corp pared gains in today’s trading.

Market Sentiment

In Tokyo trading Nikkei 225 rose 0.07% or 9.02 at 13,376.81, and the broader Topix Index advanced 0.1% or 0.63 at 1,303.62.

In the first section of the Tokyo Stock Exchange 8.7 billion shares valued at 1 trillion yen were traded and in the second section 184 million shares worth 4.1 billion yen changed hands.

Of the Nikkei 225 stocks 113 rose, 104 declined, and 8 were unchanged. Nippon Soda Co led advancers in the index shares with a rise of 21.56% followed by Sumitomo Chemical Co of 7.03%.

Japan Wages Fall 0.6% in June

The Ministry of Health, Labor and Welfare reported in its monthly labour survey on its Web site today that total cash earnings fell 0.6% to 462,013 yen in June, which is the first time this year.

Contractual cash earnings rose 0.1% to 270,478 yen, scheduled earnings were unchanged at 251,177 yen and non-scheduled cash earnings increased 0.1% at 19,301 yen, while special cash earnings fell 1.5% at 192,535 yen.

In particular, wages in the mining sector slumped 2.7% to 465,719 yen, while earnings in construction and manufacturing slipped 2.1% at 429,349 and 0.9% at 501,039 yen respectively.

The report also noted that the total hours worked fell 1.4% to 154.1 hours. Scheduled hours worked slid 1.4% to 143.6 and non-scheduled hours fell 1.8% at 10.5 hours.

Regular employment and labour turnover for regular employees in the period increased 1.5% to 45.1 million, while for full time employees and part-time employees it increased 1.6% to 33.4 million and 1.2% to 11.6 million respectively.

Nintendo Cuts Full-Year Forecast by 26.3%

Nintendo reported on its Web site today that profit in the first quarter ended June 30 rose 34% to 107 billion yen from 80 billion yen a year ago, as sales advanced to 423 billion from 340 billion a year earlier.

However, the company forecasted that full year profit for the fiscal year ending March 31, 2009 is expected to plummet 26.3% to 325 billion yen.

A slowing US economy and rising oil and commodity prices are negatively impacting on demand, especially in North America.

Gainers

Nippon Soda Co led advancers in the Nikkei 225 index shares with a rise of 21.56% followed by increases in Sumitomo Chemical Co. of 7.03%, in OJI Paper Ltd. of 5.6%, in Nisshin Seifun of 5.03%, and Kansai Electric Power of 5.01%

OJI Paper Ltd rose after the company reported that first quarter profit rose 24%.

Other utility companies also rose. Tokyo Electric Power edged up 4.57% and Chubu Electric gained 4.43%.

Commodity prices rose on rising metal prices. Nippon Mining spiked 3.97%, Nippon Oil increased 3.01% and Sumitomo Metal Industries gained 2.95%.

Denki Kagaku led decliners in the Nikkei 225 index shares with a fall of 10.31% followed by losses in Dainippon Sumitomo of 8.71%, in Denso Corp of 6.48%, in Toyota Tsusho of 6.35%, and Teijin Ltd of 6.03%.

Denso Corp. declined after it cut its net profit outlook for fiscal 2008 by 8% to 185 billion yen on weakening demand in North America. Net profit in the quarter ended June declined 23% from a year ago to 51.7 billion yen.

Exporters plummeted after Nintendo maintained its profit outlook. Komatsu slipped 4.09% and Toyota Motor Corp slid 2.31%.

TDK Corp to Purchase Epcos AG

Nikkei News reported today that TDK Corp. will purchase Europe''s leading electronic parts manufacturer, Epcos AG, for 150 to 200 billion yen.

Takeda Pharmaceuticals Profit Falls, Raises Forecasts

Takeda Pharmaceutical net income in the first quarter ended June 30 fell 98% to 2.49 billion yen. However, the company forecasted that profit in the fiscal year ending March 2009 will rise by 25% to 200 billion yen.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 9.02 or 0.07% to 13,376.81, Hang Seng index in Hong Kong increased 40.50 or 0.18% closed to 22,731.10. ASX 200 index in Australia increased 40.70 or 0.82% to close 4,977.40. The KL Composite index in Malaysia increased 3.15 or 0.27% closed to 1,163.09.

The Kospi Index in South Korea increased 16.97 or 1.08% to close at 1,594.67, SET index in Thailand closed higher 6.42 or 0.96% to 676.32 and JSE Index in Indonesia increased 25.82 or 1.13% to 2,304.51. The Sensex index in India increased 68.54 or 0.48% to 14,355.75.