Japan in Recession

123jump.com Staff
17 Nov, 2008
New York City

Economy in Japan fell for the second quarter in a row. Economy in the third quarter fell 0.4% after dropping 0.1% in the second quarter. Two quarterly declines in GDP generally augur a recession. A rise in utilities stocks lifted market index from the fall of 3% to close up 0.7%.

[R]5:00AM New York, 7:00PM Tokyo - Japan''s economy slips into recession after contracting 0.4% in quarter to September.[/R]

Japan market indices rose marginally in volatile trading as investors worried that exports may decline more than anticipated and the U.S. economic slowdown may turn into a deeper recession.

A rise in utilities stocks lifted the Nikkei index to reverse a 2.9% fall in the morning session to close up 0.7%.

In Tokyo trading the index increased 0.7% or 60.19 to 8,522.58, and the broader Topix Index edged up 0.4% or 3.58 to 850.49.

In the first section of the Tokyo Stock Exchange 8.9 billion shares valued at 665 billion yen were traded and in the section 183 million shares worth 1.3 billion yen changed hands.

Of the Nikkei 225 index stocks 129 rose, 90 declined, and 6 were unchanged. GS Yuasa Corp. led gainers in the index shares with a rise of 14.7% followed by Resona Holdings soaring 9.4%.

Japan’s Economy Drops 0.4% in the Q3

Japan’s Cabinet Office reported today that the country''s economy in the three months to September dropped 0.4% from a year earlier, sliding into a recession for the first time since 2001. Economists had forecasted that the economy would increase 0.1% in the period.

The economy also shrank 0.1% from the previous quarter. Domestic demand and private demand both increased 0.3%.

The report notes that exports advanced less-than-projected 0.7% and imports increased 1.9%.

Private consumption and consumption of households soared 1.1% and 1% respectively.

Fewer Real Estate Developers

Propertywire.com reported yesterday that total annual returns in the commercial sector declined 0.9% and retail property prices shed 4% in a year. However, the residential market dropped 1.3%.

The Real Estate Economic Institute also recently said that the number of real estate developers has dropped to 203 from 547 in 1995.

In the January-September period 425 real estate companies were closed.

Yen Falls

The yen fell to 97.47 against the dollar today from 97.14 on Friday last week.

Gainers & Losers

GS Yuasa Corp. led advancers in the index shares with a rise of 14.7% followed by increases in Resona Holdings of 9.4%, in Sompo Japan Insurance of 8.5%, in Asahi Glass Co. of 8.2%, and Furukawa Electric Co. of 7.7%.

Utility stocks rose as investors sought safety from the global financial markets volatility. Yokogawa Electric jumped 6.9% and Mitsumi Electric Co. climbed 6%.

Chiyoda Corp. led decliners in the Nikkei 225 index shares with a decline of 8.6% followed by losses in Credit Saison Co. of 7.6%, in Tokyu Land Corp. of 5.8%, in Sumitomo Corp. of 5.6% and Mitsubishi Estate Co. of 5.4%.

Realty stocks plummeted on news that conditions have continued to deteriorate in the property sector. Mitsui Fudosan dropped 5.2% and Heiwa Real Estate of 4.5%.

Inpex 3.4% after crude oil prices fell to $55 per barrel. Mitsui & Co also shed 3.5%.

Sumitomo Mitsui and Bank of East Asia

The Nikkei Newspaper reported today that Sumitomo Mitsui Financial Group is in talks with Hong Kong''s Bank of East Asia to form a business alliance.

Suzuki to Buy its Shares Owned by General Motors

Separately the online edition reported that Suzuki Motor Corp. has agreed to buy its entire 3.02% stake owned by General Motors at 1,363 yen per share.

However the companies will continue to work together in emerging markets in developing new auto technology.