Japan Stocks Follow Global Slow Down

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

Stock market indexes in Japan fell as more evidence emerged of a global economic slowdown. Investors sought stocks linked to the domestic economy and sold stocks linked to exports to the U.S. and Europe. The U.S. dollar also strengthened against yen. Construction sector in Japan continue to take more casualties as more companies face tighter lending standards. Sebon Corp filed for bankruptcy protection with 62 billion yen in liabilities.

[R]5:00AM New York, 7:00PM Tokyo - Sebon Corp files for bankruptcy with 62 billion yen liabilities.[/R]

Japan stock indexes traded in negative territory after a spate of negative data showing that the global economy is slowing. However domestic related stocks pared losses as investors sought a haven from deteriorating market conditions.

Market Sentiment

In Tokyo trading Nikkei 225 shed 0.78% or 99.95 to 12,778.71, and the broader Topix Index fell 0.8% or 9.90 to 1,229.35.

In the first section of the Tokyo Stock Exchange 6.1 billion shares worth 617 billion yen were traded and in the second section 124 million shares valued at 1.6 billion yen changed hands.

Of the Nikkei 225 stocks 46 rose, 165 declined and 14 were unchanged. Nippon Sheet Glass led advancers in the index shares with a rise of 5.14% followed by Yamaha Corp. increasing 3.16%.

Sebon Corp. Files For Bankruptcy

Sebon Corp., which holds 85.25% of Asahi Homes, filed for bankruptcy protection with 62 billion yen in liabilities as reported by Bloomberg News.

The company has faced increased pressure from the tightened screening of real estate loan applications, while construction orders plummeted after the government enforced the tougher Building Standards Law.

Official statistics also indicate that real estate and construction companies account for a third of bankruptcies in Japan in July due to a slowing economy and tightened lending conditions in the financial sector.

AIG Credit Losses to Top $2.41 billion in Q3

Credit Suisse reported recently cut its earnings estimate on American International Group and lowered target price to $30 from $22 in a research note due to the continued deterioration in debt holdings. The largest insurance company in the world is expected to write down $2.4 billion in mortgage related assets.

AIG is now forecasted to report a loss of $0.86 per share in the third quarter from an earlier projection of $0.13 per share.

Gainers & Losers

Nippon Sheet Glass led advancers in the Nikkei 225 index shares with a rise of 5.14% followed by rises in Yamaha Corp. of 3.16%, in Nippon Express of 2.19%, in Toto Ltd of 2.94%, and Fuji Heavy Industry of 2.89%.

Seven & I Holdings led decliners in the Nikkei 225 index shares with a fall of 4.83% followed by losses in Mitsui Engineering & Shipbuilding of 4.33%, in CSK Holdings Corp. of 4.23%, in Matsui Securities of 4.17%, and Fukuoka Financial of 4.03%.

Fukuoka Financial Group slumped after HSBC slashed the stock to “underweight” from “neutral” on soaring property defaults.

Other regional banks fell as well. Bank of Yokohama plunged 2.55% and Chiba Bank slid 2.07%.

Realty stocks dipped after Sebon Corp filed for bankruptcy. Tokyu Land Corp shed 3.46% as a result.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 99.95 or 0.78% to 12,778.71, , Hang Seng index in Hong Kong decreased 48.13 or 0.23% closed to 21,056.66.ASX 200 index in Australia decreased 7.40 or 0.15% to close 5,007.50. The KL Composite index in Malaysia decreased 8.23 or 0.76% closed to 1,070.50.

The Kospi Index in South Korea decreased 11.86 or 0.79% to close at 1,490.25, SET index in Thailand closed lower 9.28 or 1.37% to 668.92 and JSE Index in Indonesia decreased 19.68 or 0.92% to 2,107.55. The Sensex index in India increased 31.87 or 0.22% closed to 14,482.22.