Tokyo Stocks Surge on Stimulus of 15.4 T Yen

123jump.com Staff
09 Apr, 2009
New York City

Stocks in Tokyo surged after ruling party proposed to spend 15.4 trillion yen to arrest the widening recession and falling domestic demand. Nearly 40% of the budget is targeted at long term projects. Investor sentiment was also boosted by 1.4% rise in private sector machinery orders in February.

[R]5:00AM New York, 7:00PM Tokyo - Japan to spend 15.4 trillion yen on economic stimulus package. Japan’s machinery orders fall 7.1% in February.[/R]

Japan stock indexes gained 3.7% on the proposed stimulus package that is larger than earlier expected. The 50% larger stimulus than previously discussed lifted market sentiment.

Investor sentiment was also boosted by the news that private sector machinery orders climbed 1.4% in February.

In Tokyo trading Nikkei 225 gained 3.7% or 321.05 to 8,916.06, and the broader Topix Index advanced 3.3% or 26.55 to 841.81.

In the first section of the Tokyo Stock Exchange 26 billion shares worth 1.5 trillion yen were traded and in the second section 394 million shares valued at 9.1 billion yen changed hands.

Of the Nikkei 225 index stocks, 208 rose, 14 dropped, and 3 were unchanged. Pioneer Corp. led advancers in the index shares with an increase of 18.6%.

Japan to Spend 15.4 trillion yen on Economic Stimulus Package

Japan’s ruling Liberal Democratic Party unveiled a 15.4 trillion yen economic stimulus plan which includes tax cuts and increased spending.

The total value of government proposed interventions are estimated to be worth 56.8 trillion yen.

Japan’s extra budget that is being crafted to support the stimulus is estimated to be double the 8 trillion yen extra budget for the stimulus in 1998.

LDP’s package has four components that include emergency measures to generate jobs and support corporate finances, strategies to support competitiveness, tax cuts and maximizing the government’s growth potential.

As part of the stimulus measures, the country will create a fund that will raise funds from the private and public sectors to buy properties that are held by real estate investment trusts.

Legislative changes to enable a government entity to buy openly traded stocks and guarantee share purchases of up to 50 trillion yen is also being sought.

There are attempts to boost the property market through subsidies for companies are not shedding staff and to create safety nets for temporary workers. Japan will increase the amount of loans it guarantees to small companies.

In addition, tax cuts totaling 100 billion yen are considered.

Longer-term projects to be included in the stimulus package are valued at 6.2 trillion yen and encompass interventions in energy-saving technology, medical care services, and infrastructure.

The second category contains a variety of tax cuts totaling 100 billion yen.

Japan will also spend 4.3 trillion yen for extending government support and guarantees, channel 2.4 trillion yen to local governments, reinforce public security systems, and revitalize rural economies.

Japan’s Machinery Orders Drop 7.1% in February

Japan’s cabinet office reported today that the total value of machinery orders received by 280 manufacturers operating in Japan declined by 7.1% or 1.5 trillion yen in February from the previous month on a seasonally adjusted basis. Orders are forecasted to rise 3.5% or 5.9 trillion yen in the three months to March.

Private-sector machinery orders, excluding volatile orders for ships and for electric power companies, rose 1.4% or 728 billion yen in February, while orders in the sector are estimated to advance 4.1% to 2.5 trillion yen in the March quarter.

Manufacturing orders dipped 8.1% to 202 billion yen in February and are estimated to fall 6.8% to 942 billion yen.

According to the report, non-manufacturing orders increased 3.3% or 521 billion yen in February and are forecasted to rise 1.6 trillion yen in the January to March period.

Government orders plunged 9.9% to 222 billion yen in the review period.

Gainers & Losers

Pioneer Corp. led gainers in the Nikkei 225 index shares with an increase of 18.6% followed by gains of 18.6% followed by increases in CSK Holdings Corp. of 17.6%, in T&D Holdings of 11.4%, in Sharp Corp. of 10.7%, and Mazda if 10.2%.

Chugai Pharmaceutical Co. led decliners in the Nikkei 225 index shares with a fall of 1.5% followed by losses in Kansai Electric Power of 1.5%, in Tokyo Gas Co. of 1.4%, in Dainnipon Sumitomo of 1%, and Tokyo Electric Power of 0.8%.

Utilities companies declined as oil prices increased 0.1% to $49.40 per barrel. Odakyu Electric and Chubu Electric tumbled 0.5% each.