Japan Cabinet Pass Record Budget

123jump.com Staff
24 Dec, 2008
New York City

The Cabinet in Japan approves the largest budget for the fiscal year beginning next April. The budget increased 6.6% despite a fall in tax receipts. The government proposes to spend more for pensioners, payment to states and for emergency economic fund. Denso lowered its annual profit estimate.

[R]5:00AM New York, 7:00PM Tokyo- Japan approves record 88.55 trillion yen budget for the year starting in April 2009. Business confidence falls in the December quarter. Denso cuts profit forecast by 90%.[/R]

Japan stocks fell after business confidence dropped to record low in the three months to December and Denso Corp cut its profit estimate by 90%. Falling U.S. home sales also negatively affected investor sentiment.

In Tokyo trading Nikkei 225 index fell 2.4% or 206.68 to 8,517.10, and the broader Topix Index slipped 2.6% or 21.73 to 826.99.

In the first section of the Tokyo Stock Exchange 7.4 billion shares worth 512 billion yen were traded and in second section 253 million shares valued at 2.2 billion yen changed hands.

Of the Nikkei 225 index stocks, 22 rose, 199 declined, and 4 were unchanged. Tokyo Gas Co. led advancers in the index shares with a rise of 4.3%.

Japan’s Business Confidence Falls in December Quarter

Japan’s Cabinet Office reported today that business sentiment for large enterprises declined 35.7 points in the three months to December, while sentiment for medium-sized and small enterprises tumbled 33.3 points and 40.7 points respectively.

Sentiment for large manufacturing enterprises slipped 44.5 points in the quarter to December. Medium-sized manufacturing enterprises fell 43.7 points and small manufacturing enterprises plunged 51.3 points.

Large manufacturers are planning to cut spending on plant and equipment by 2.4% in the year ending March.

In addition, business sentiment for non-manufacturing large enterprises plummeted 30.5 points, at medium-sized enterprises down 30 points and small-sized enterprises falling 38.5 points.

Japan Passes Y88.55 trillion Budget

The government in Japan approved a record 88.55 trillion yen budget for the year from April 2009 to fight a decline in economic growth.

The approved budget which includes tax cuts and cash rebates is 6.6% larger than the fiscal 2008 budget.

Prime Minister Taro Aso said, “We need to take unprecedented measures when in an extraordinary economic situation. Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world''s first to come out of recession.”

Aso plans to distribute 2 trillion yen to households in cash stipends worth 64,000 yen for a family of working age parents and two children.

U.S. Home Sales Fall 8.6% in November

National Association of Realtors in Washington reported yesterday that existing homes sales dropped 8.6% to a seasonally adjusted annual rate of 4.49 million units in November from a revised 4.91 million units in October. Sales also declined 10.6% from the same period a year ago.

The report notes that total housing inventory increased 0.1% to 4.2 million existing home sales available for sale at the end of November. National median existing-home price for all housing types dropped 13.2% from November 2007 to $181,300.

Single family home sales fell 8% to a seasonally adjusted annual rate of 4.02 million in November, while existing condominium and co-op sales also plummeted 13% to a seasonally adjusted annual rate of 470,000 units in November from 540,000 in October.

NAR chief economist Lawrence Yuan said, “The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level.”

Gainers & Losers

Tokyo Gas Co. led advancers in the Nikkei 225 index shares rose 4.3% followed by increases in Meidensha Corp. of 3.4%, in Japan Tobacco of 2%, in Secom Co. of 1.9%, and Sumitomo Chemical Co. of 1.8%.

Shinsei Bank Ltd. led decliners in the Nikkei 225 index shares with a fall of 11.5% followed by losses in Tosoh Corp. of 8.1%, and Mitsubishi UFJ Financial Group of 7.5%, and Sompo Japan Insurance of 7.4%, and Olympus Corp. of 7.3%.

Commodity stocks declined after crude oil prices fell $0.93 to $39 a barrel and gold prices declined $9.10 to $838.1 per barrel.

Mitsubishi Corp. dropped 6.8% and Sumitomo Metal Mining shed 5.7%.

Denso Corp. Drops Profit by 90%

Denso Corp. lowered net fiscal year profit estimate to 10 billion yen from 101 billion yen projected earlier.

The company also revised its sales projection to 3.3 trillion yen from 3.65 trillion yen estimated at the end of October, while operating profit is now expected to fall to 38 billion yen from 178 billion yen.

Managing director of Denso Sadahiro Usui said, “The business environment in the automotive industry is also drastically declining due to decreasing exports and the appreciated yen in Japan, in addition to slumping consumer spending worldwide.”

Denso, the auto parts makers employs 119,000 people in 32 countries with revenues of $40.2 billion in fiscal 2008 ending in March.