Tokyo Follows U.S. Gains

123jump.com Staff
06 Aug, 2008
New York City

Stocks in Tokyo rallied tracking the gains in the U.S. markets. Benchmark index rose 2.6% and broader index gained 2.4% on the hopes that exports to the U.S. will be sustained. Mitsubishi UFJ first quarter earnings fell 66% from a year ago to 51 billion and total net assets dropped 3% to 9.3 trillion. Sony agreed to acquire 50% stake in the joint venture Sony BMG that it does not own for $900 million and cash in the balance sheet of the venture.

[R]5:00AM New York, 7:00PM Tokyo – A sharp rally of 3% in the U.S. and a drop in crude oil lifted stocks in Tokyo. Mitsubishi UFJ earnings fell 66%. Sony is to acquire a total control of Sony BMG.[/R]

Tokyo market averages traded in positive territory as the continued decline in crude oil prices buoyed exporters and eased inflationary worries.

Market Sentiment

In Tokyo trading Nikkei 225 rose 2.63% or 340.23 to 13,254.89, and the broader Topix Index increased 2.4% or 29.56 to 1,277.27.

In the first section of the Tokyo Stock Exchange 9.7 billion shares worth 1 trillion yen were traded and in the second section 140 million shares valued at 2.5 billion yen changed hands.

Of the Nikkei 225 stocks 191 rose, 30 declined, and 4 were unchanged. Pioneer Corp led advancers in the index shares with a rise of 12.99% followed by Obayashi gaining 12.32%.

Japan’s Measure on Economy Falls

The Nikkei News reported on its Web site today that the key measure of the current state of the country’s economy slumped 1.6 points in June from a month ago, while the government downgraded its assessment of the economy to “worsening”.

Mitsubishi UFJ Profits Falls 66%

Mitsubishi UFJ Financial Group reported today that profits in the first quarter ended June 30 declined 66% to 51 billion yen from 151 billion yen in the same period a year ago.

Total net assets during the period fell by 278.8 billion yen from March 31, 2008 to 9,320.8 billion yen due to a decrease of total valuation and translation adjustments by 104.9 billion yen, caused by a drop of net deferred gains on hedging instruments and foreign currency translation adjustments.

Also loans and bills discounted as of June 30, 2008 increased by 1,019.0 billion yen from March 31, 2008 to 89,557.8 billion yen.

Sony Corporation to Purchase Bertelsmann’s 50% Stake in Sony BMG

Sony Corporation reported on its Web site today that the first portion of Bertelsmann’s interest in SONY BMG will be redeemed for approximately $600 million of cash by Sony BMG, while U.S. wholly-owned subsidiary, Sony Corporation of America, will subsequently purchase the remaining equity from Bertelsmann for approximately $600 million.

In all, Bertelsmann will receive approximately $900 million in value for its 50% stake plus $300 million of its share of cash on Sony BMG''s balance sheet.

As part of the deal, Bertelsmann will also be taking over a limited amount of selected European music catalog assets from SONY BMG.

Gainers & Losers

Pioneer Corp. led advancers in the Nikkei 225 index shares with a rise of 13% followed by increases in Obayashi Corp of 12.32%, in Shimizu Corp of 10.37%, in Sanyo Electric of 10.14%, and Fujitsu of 9.54%.

Battery makers advanced after Sanyo Electric projected that its solar-battery market share will increase by 10% by 2020. NGK Insulators edged up 8.30% and Yuasa Corp surged 8.86%.

Automakers also gained after oil prices declined by 0.8% to $118.25, raising expectations that production costs will fall and demand will pick up. Isuzu climbed 6.35% and Bridgestone jumped 6.82%.

Daiichi Sankyo led decliners in the Nikkei 225 index shares with a fall of 4% followed by losses in Osaka Gas Co Ltd of 2.69%, in Seven & I Holdings of 2.28%, in Chubu Electric Power in 1.66%, and Toyobo Co Ltd of 1.50%.

Financial stocks slumped as Mitsubishi UFJ Financial Group reported today that first quarter profit fell by 66% to 51 billion yen from 151 billion yen a year ago. The stock closed down 1.20%. Resona Holdings plummeted 0.62%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 340.23 or 2.63% to 13,254.89. ASX 200 index in Australia increased 148.70 or 3.08% to close 4,969.10. The KL Composite index in Malaysia increased 4.73 or 0.42% closed to 1,133.59. Market of Hong Kong was closed today.

The Kospi Index in South Korea increased 43.17 or 2.81% to close at 1,578.71, SET index in Thailand closed higher 9.23 or 1.38% to 676.35 and JSE Index in Indonesia increased 1.59 or 0.07% to 2,187.20. The Sensex index in India increased 112.47 or 0.75% to 15,073.54.