Japan GDP Shrinks 4%; Shippers Rise

123jump.com Staff
20 May, 2009
New York City

Japan economy declined the most in its fourth quarterly shrinkage in a row. A sharp fall in exports and domestic consumption contributed to the shrinkage in the economy. Shipping lines surged on a rise in freight rate index.

[R]8:00 PM Tokyo – Japan economy declined the most in its fourth quarterly shrinkage in a row. A sharp fall in exports and domestic consumption contributed to the shrinkage in the economy. Shipping lines surged on a rise in freight rate index.[/R]

Japan recorded its deepest and fourth quarterly GDP decline in a row. The economy shrank 4.0% from the previous quarter on weak domestic demand and a sharp decline in exports.

Economy began weakening in the second quarter of 2008 with a fall of 0.9% from the previous quarter and declined 0.6% in the third quarter and accelerated the decline to 3.8% in the fourth quarter of 2008.

On a seasonally adjusted basis economy shrank at 15.2%. The decline in net exports contributed to 1.4 percentage point fall in the quarterly GDP fall of 4%.

Gross capital formation that includes residential investment, private non-residential investment and public spending, plunged 7.7%.

The Nikkei 225 Index in Tokyo closed higher 54.35 or 0.6% to 9,344.64.

Baltic Dry Index gained 1.5% to 2,644, a high not seen since October of 2008. The successive daily gains for the second week is fueled by a rising optimism that China’s economic stimulus will sustain the demand for commodities and crude oil.

Baltic Dry Index plunged to a low below 650 in December 2008 after rising as high as 11,840 in May 2008.

Gainers & Losers

Mitsui O.S.K. Lines increased 2.1% or 13 yen to 633 yen. The rise in freight rate index lifted stocks of shipping companies.

Kawasaki Kisen Kaisha Ltd gained 4.7% or 18 yen to 404 yen after the freight rate index registered daily gains for the second week in a row. The sustained demand from China has lifted shipping rates.

Tokio Marine Holdings dropped 2.6% or 75 yen to 2,825 yen after T&D reported larger than expected loss.

T&D Holdings plunged 15.4% or 500 yen to 2,760 yen after Japan’s largest publicly traded life insurer reported full-year revenues rose 9% to ¥2.54 trillion. Net loss in the year was ¥89.10 billion or ¥359.65 per diluted share compared to net profit of ¥36.75 billion or ¥149.24 per share a year ago.

Mitsubishi Corp surged 5% to 1,744 after commodities prices rose and crude oil gained more than 1% in trading.

Earnings News

Mitsui Sumitomo Insurance Group Holdings, Inc, a joint-stock company reported full-year net profit in the year fell 80% to ¥8.19 billion compared to net profit of ¥40.0 billion a year ago.

Tokio Marine Holdings, Inc, the insurance company reported full-year revenues fell 5.6% to ¥3.50 trillion from ¥3.71 trillion a year ago. Net profit in the year fell 79% to ¥23.14 billion or ¥29.12 per diluted share compared to net profit of ¥108.8 billion or ¥133.50 per share a year ago.

Nikkei 200 Average Movers

T&D Holdings, Inc. led the decliners in the Nikkei 225 index of 15.3% followed by losses in Nippon Sheet Glass Company, Limited of 9.1%, in Taiheiyo Cement Corp. of 4.8 %, in CSK Holdings Corporation of 4.0% and in Shimizu Corporation of 3.6%.

Chiyoda Corp. led gainers in the Nikkei 225 index with a rise of 9.0% followed by gains in Meidensha Corp. of 8.3%, in JTEKT Corporation, of 6.8% and Nippon Mining Holdings Inc of 6.8%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 54.35 or 0.6% to 9,344.64, Hang Seng index in Hong Kong decreased 68.19 or 0.39% closed to 17,475.84, CSI 300 index in China lower 27.22 or 1% closed to 2,812.86. ASX 200 index in Australia increased 7.30 or 0.2% closed to 3,824.60. The KL Composite index in Malaysia higher 19.14 or 1.9% closed to 1,042.63.

The Kospi Index in South Korea increased 7.49 or 0.5% to close at 1,435.70. SET index in Thailand closed higher 4.94 or 0.9% to 561.41 and JSE Index in Indonesia decreased 0.29 or 0.02% closed to 1,885.72. The Sensex index in India decreased 241.37 or 1.7% closed to 14,060.66.