BoJ Paln to Buy Stocks from Banks

123jump.com Staff
03 Feb, 2009
New York City

The Bank of Japan announced a plan to buy liquid stocks and other highly rated securities from banks that are battered by rising losses. The latest move by the Bank of Japan will add more capital in the financial system and may spur lending. Banks have been reluctant to lend. Denso forecasted loss.

[R]5:00AM New York, 7:00PM – The Bank of Japan announced a plan to buy 1 trillion yen worth of shares held by financial institutions. Honda cuts managers salaries by 5%.[/R]

Japan market averages fell fractionally after continued worries over corporate earnings. The Bank of Japan has begun to purchase 1 trillion yen worth of shares held by financial institutions.

Denso Corp. forecasted a net loss of 64 billion yen from a previous forecast for a gain of 10 billion yen in the fiscal year ending March 31, sparking fears that conditions in the global market will continue to deteriorate.

In Tokyo trading Nikkei 225 index fell 0.6% or 48.47 to 7,825.51, and the broader Topix Index declined 0.5% or 4.06 to 773.79.

In the first section of the Tokyo Stock Exchange 9 billion shares worth 532 billion yen were traded and in the second section 98 million shares valued at 952 million yen changed hands.

Of the Nikkei 225 index stocks, 82 increased, 132 declined, and 11 were unchanged. TDK Corp. led gainers in the index shares with a rise of 6.3% followed by Hitachi Ltd. of 6.2%.

Bank of Japan to Buy Financial Institution Shares

The Bank of Japan reported today that it is beginning to purchase 1 trillion yen worth of shares that are held by financial institutions until April 2010.

However the central bank will only purchase securities rated BBB- or above by rating agencies and the stocks need to be actually traded for 200 days or more per year and have an annual turnover of 20 billion yen or more on the stock exchange.

The limit will be 250 billion yen per bank.

Financial institutions are expected to submit their plans to reduce market risk associated with stockholdings in the medium to long term, and monitor the institutions'' future specific approaches.

Bank of Japan will not sell purchased stocks on a stock exchange until March 2012 and the Bank will subsequently complete the disposal of stocks by end of September 2017.

The bank in a statement noted, “In particular, while Japanese financial institutions have reduced their stockholdings compared with those in the beginning of 2000s, their latest third quarter financial statements have reported massive realized and unrealized losses, suggesting that coping with market risk associated with stockholdings remains their critical business challenge.""""

Honda to Cut Managers Salaries by 5%

Honda Motor Co. reported yesterday that it will cut its manager''s salaries by 5% starting from March. This cut is in addition to10% reduction for directors announced last month.

The salary cut will affect 4,800 managers at Honda group companies in Japan and in other countries.

According to Honda, the reduction will continue through May.

Last week, Honda cut its annual profit projection in the year through March by 57% to 80 billion yen from 185 billion yen earlier, while sales forecasts were lowered by 3% to 10.1 trillion yen.

Gainers & Losers

TDK Corp. led gainers in the Nikkei 225 index shares with a rise of 6.3% followed by increases in Hitachi Ltd. of 6.2%, in Kawasaki Kisen of 5.7%, in Nippon Mining House of 5.6%, and Hitachi Construction Machinery of 5.5%.

Shipping lines advanced. Nippon Yusen gained 5.2% and Mitsui OSK Lines edged up 4.9%.

Shinsei Bank Ltd. led decliners in the Nikkei 225 index shares with a fall of 7.4% followed by losses in Daiichi Sankyo of 6%, in CSK Holdings Corp. of 5.8%, in KDDI Corp. of 5.6%, and Ajinomoto of 5.5%.

Denso Corp. Forecasts Net Loss

Denso Corp. forecasted a net loss of 64 billion yen in the fiscal year to March 31 from a profit of 10 billion yen that was earlier projected.

Net sales in the period are expected to drop 22.6% to 3.1 trillion yen from 3.3 trillion yen previously projected

Operating income in the period is supposed to realise a loss of 62 billion yen from 38 billion yen previously announced.

The company reported that sales in Japan fell 10.2% to 1.8 trillion yen, while sales in North, Central and South America plunged 24.1%