Tokyo Stocks Rise 3.6%; Cloudy Outlook

123jump.com Staff
20 Oct, 2008
New York City

Stocks in Japan rose on the hopes that the earnings for the latest quarter will be better than expected. Panasonic operating profit is likely to be higher than expected and steel makers are expected to revise earnings higher for the year. Exporters may benefit from weaker yen.

[R]5:00AM New York, 7:00PM Tokyo – The Bank of Japan lowers economic assessment in all regions. Toshiba purchases flash memory equipment from SanDisk. Steelmakers are expected to revise earnings higher.[/R]

Japan stocks rose despite a report that showed that the central bank has cut its economic assessment of all the nine regions for the first time.

Investors were bullish on the earnings prospects of Japanese companies as the Nikkei business news reported that Panasonic’s operating profit will beat its initial forecast by 20 billion yen.

Steelmakers JFE Holdings and Nippon Steel may revise their group pre-tax profit estimates higher for the current fiscal year on declining raw material and fuel costs and rising steel prices.

Exporters also advanced on a weaker yen on easing concerns in the credit market.

Market Sentiment

In Tokyo trading Nikkei 225 increased 3.6% or 311.77 to 9,005.59.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 745 billion yen were traded and in the second section 122 million shares worth 1.2 billion yen changed hands.

Of the Nikkei 225 index stocks 186 rose, 31 declined, and 8 were unchanged. Fuji Electric House led advancers in the index shares with a rise of 12.92% followed by Canon Inc of 12.58%.

BoJ Lowers Economic Assessment in All Regions

The Bank of Japan reported at its latest branch managers meeting that all nine regions have lowered their assessment on rising energy and food prices and weak exports.

Tohoku, Hokuriku, Tokai, and Chugoku revised their assessments downward, while the remaining five regions revised their assessments slightly downward.

Private consumption was in a “somewhat sever situation” in Hokkaido and “weak” in Chugoku and was weakening and relatively weak in other regions.

Hokuriku and Tokai maintained their previous assessments, and Tohoku and Chugoku downgraded their assessments, and Hokkaido, Kanto-Koshinetsu, Kinki, Shikoku, and Kyushu-Okinawa revised their assessments slightly downward.

Food sales were firm, but sales of apparel, general merchandise and accessories were relatively weak.

Sales of passenger cars and travel expenses were weak on rising oil prices, while sales of consumer electronic equipment, especially flat-panel televisions, were strong.

Hokkaido, Tohoku, Chugoku, and Shikoku maintained their previous assessments on business fixed investment, while Hokuriku revised its assessment downward, and Kanto-Koshinetsu, Tokai, Kinki, and Kyushu-Okinawa revised their assessments slightly downward.

Employment was relatively weak in all regions but household income was generally weak for Kanto-Koshinetsu, Tokai, Kinki, and Chugoku.

Gainers & Losers

Fuji Electric House led advancers in the Nikkei 225 index shares with a rise of 12.9% followed by increases in Canon Inc. of 12.6%, in NGK Insulators of 9.9%, in Yamato Holdings of 10%, in Bridgestone Corp. of 9.5%.

Canon Inc and other chip makers rose after Toshiba purchased flash memory equipment from SanDisk and noted that the NAND flash memory market will continue to increase in the medium to long-term.

Exporters advanced as the yen fell to 102.14 from 101.69 against the dollar. Bridgestone Corp. soared 10%, Panasonic jumped 8.9% and Sony Corp increased 7.6%.

Marui Group led decliners in the Nikkei 225 index shares with a fall of 5.21% followed by losses in Nippon Suisan of 4.4%, in CSK Holdings Corp. of 4.3%, in Japan Steel Work of 3.9%, and Hitachi Ltd. of 3.2%.

Toshiba Buy Flash Memory Equipment from SanDisk

Toshiba reported today that it has signed a non-binding memorandum of understanding with SanDisk based in the U.S. assume sole ownership of 30% capacity at Fab3 and fab4 at Yokkaichi Operations.

The reallocated equipment produces NAND flash memory on 300-millimeter wafers at the plant.

The production of 70% will be owned by the joint ventures between Toshiba ad SanDisk- Flash Partners Ltd. and Flash Alliance Ltd.

Toshiba plans to increase sales of NAND flash memories in the wake of news that the flash memory market will grow at the average annual rate of more than 200%.

Toshiba closed up 1.67%.