Tokyo Stocks Surge 5.2%

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

Stocks in Tokyo rallied tracking the gains in the U.S. following the Friday holiday. Banks gained after the U.S. extended second rescue package to Citigroup. The Bank of Japan lowered its domestic economy assessment. Panasonic to pay $5.2 billion for a majority stake in Sanyo Electric.

[R]5:00AM New York, 7:00PM Tokyo -Tokyo stocks rally after the U.S. extended guarantees to and investment in Citigroup, which is teetering to financial default. The Bank of Japan cuts assessment of economy.[/R]

Stocks in Japan rallied on positive investor sentiment after the U.S. government extended its support to the troubled bank Citigroup. The U.S. agreed to invest $20 billion the bank and guarantee $306 billion of its mortgage backed loans.

In Tokyo trading Nikkei 225 rose 5.2% or 413.14 to 8,323.93, and the broader Topix Index gained 3.6% or 28.89 to 831.58.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 724 billion yen were traded and in the second section 122 million shares valued at 1.4 billion yen changed hands.

Of the Nikkei 225 stocks 207 increased, 11 declined, and 7 were unchanged. Nisshinbo Industries led advancers in the index shares with a rise of 14.6% followed by Minebea Co. Ltd. of 14.2%.

Japan''s Economy to Remain Sluggish

The Bank of Japan reported today in its monthly economic review that the country economic activity is likely to remain sluggish in the next several quarters as the economic decline deepens on earlier increases in oil and raw material prices.

The fixed investment by businesses has dropped on weaker corporate profits, while private consumption remains weak on rising prices and weakening household income.

The report also says exports, domestic private demand, public investment and production will continue to decline.

Consumer price increase from the current annual rate of 2.5% is expected to moderate as petroleum prices drop and food prices moderate.

The BoJ also says despite the slash in the key lending rate to 0.3%, interest rates on term deposits and JGB repo markets remain high as lenders remain reluctant to take risks.

Large firms increased borrowing from banks to cover decline in the issuance of CP (Commercial Paper) and corporate bonds, while an increasing number of small firms are reporting that the financial positions are weak and “lending attitudes of financial institutions are severe.”

Panasonic to Pay $5.2 billion for Sanyo Electric Co.

Yomiuri News reported today that consumer electronics maker Panasonic Corp. is considering paying 120 yen per share or 500 billion yen to purchase a majority stake in Sanyo Electric Co. from creditors organized by Goldman Sachs.

Asahi news also reported today that Panasonic may pay 1 trillion yen to purchase all of Sanyo''s common and preferred shares.

Gainers & Losers

Nisshinbo Industries led advancers in the Nikkei 225 index shares with a rise of 14.6% followed by increases in Minebea Co. Ltd of 14.2%, in Sumitomo Mitsui Financial Group of 13.3%, in Chuo Mitsui Trust of 13.3%, and Sumitomo Realty of 13%.

Financial and realty stocks rose on news of a bailout of Citigroup by the U.S. government. Mitsui Fudosan soared 10.9%.

Sanyo Electric led decliners in the Nikkei 225 index shares with a fall of 2.5% followed by losses in Isuzu Motors of 2.3%, in Seven & I Holdings of 1.6%, in Sumitomo Electric Industries of 1%, and Nippon Oil Corp. of 0.9%.

Bridgestone Corp. declined after crude oil prices for January delivery dropped 9.2% to $54.50 per barrel.