Weak Property Sector Drags Tokyo; MUF Net Down

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

Stocks in Japan dropped after property developers cut supply to lower inventories of unsold apartment units. Nearly 450 developers have been forced out in the last one year on tighter lending and weak demand. Mitsubishi UFJ interim profit plunges 64%. Sony Financial Holdings net drops 27%.

[R]5:00AM New York, 7:00PM Tokyo – Stocks in Japan dropped 2.3% as property developers trim outlook for the rest of the year and 2009. Mitsubishi UFJ Financial Group profit plunges 64% in H1. Sony Financial Holdings net dropped 27%.[/R]

Stocks in Japan declined 2.3% led by property developers after reports showed weak sales, fall in new supply and closure of more than 450 property developers.

Market was further unnerved after the largest lender Mitsubishi UFJ Financial Group announced that interim profit plunged 64%. Paper and rubber stocks pared losses as oil prices fell 3.5% to $55 per barrel.

In Tokyo trading Nikkei 225 dropped 2.3% or 194.17 to 8,328.41, and the broader Topix Index shed 1.8% or 15.05 to 835.44.

In the first section of the Tokyo Stock Exchange 9.4 billion shares worth 697 billion yen were traded and in the second section 125 million shares valued at 1 billion yen changed hands.

Of the Nikkei 225 index stocks 74 rose, 138 declined, and 13 were unchanged. OJI Paper Co. led advancers in the index shares with a rise of 6.9% as crude oil prices fell 3.5% to $55 per barrel.

Condo Developers Reduce Supply as Demand Falls

Nikkei News reported today that leading developers of condominiums have been downgrading their sales plans to reduce inventory of unsold units. The inventories are expected to remain high till the end of 2009. Real Estate Economic Institute expects unit offerings to plunge below 50,000.

MUF Profit Falls 64%

Japan’s largest bank Mitsubishi UFJ Financial Group reported today that its first half profit in the period ended September 30 fell 64% to 92 billion yen from 256 billion yen a year earlier.

Net interest income in the period dropped marginally to 970 billion yen from 966 billion in the comparable year ago period on higher credit costs and unfavourable earnings from securities holdings.

Net fees and commissions also dipped to 505 billion yen from 547 billion yen a year ago.

However MUFJ forecasts that annual net profit will fall to 220 billion from an average estimate of 217 billion yen.

The lender is seeking to raise $10.3 billion to strengthen its capital base and to fund the $9 billion investment for a 21% stock in Morgan Stanley.

Prior to the announcement, shares of Mitsubishi UFJ closed down 6.7% at 546 yen. The stock has fallen 48 percent so far this year, in line with a similar decline in Tokyo''s bank index.

Gainers & Losers

OJI Paper Co. led advancers in the Nikkei 225 index shares with a rise of 6.9% followed by increases in Mazda Motor of 6.4%, in Furukawa Co. Ltd. of 4.6%, in Obayashi Corp. of 4.3%, and Yokohama Rubber of 4.1%.

OJI Paper Co. rose after crude oil prices for December delivery dropped 3.5% to $55 per barrel. Nippon Paper Group advanced 2.9% as well.

Mazda Motor increased on news that troubled U.S. automaker General Motors will sell its 20% stake in Mazda to raise capital.

Softbank Corp. led decliners in the Nikkei 225 index shares with a fall of 15% followed by losses in Kubota Corp. of 9.6%, in Sompo Japan Insurance of 8.9%, in Tokyo Marine HD of 8.8%, and Mitsubishi Estate Co. of 8.3%.

Property developers fell on falling demand. Mitsubishi Estate Co. slipped 5.9% as a result.

Earnings Review

Sony Financial Holdings Inc reported yesterday that the company’s profit in the first half ended September 30 declined 27% to 12.1 billion yen on lower investment returns on the at the investment unit.

Revenue soared 4% to 420 billion yen and Sony Life Insurance Co.''s premium revenue rose 3% to 327 billion yen. Investment returns however fell 71% to 10.3 billion yen on falling stock markets.

Also Nonlife insurance unit Sony Assurance Inc. reported a 10% jump in premium revenue to 30.3 billion yen.