Stocks in Japan Fall, Sony $2.2 Billion Bonds

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

Financial stocks in Tokyo led the decliners after the proposed merger between two insurance companies faced resistance. Executives at Nipponkoa expressed dissatisfaction with Sompo Japan merger. Investors have turned cautious after recent sharp gains in the commodities and benchmark indexes.

[R]5:00AM New York, 7:00PM Tokyo – Financial stocks in Tokyo led the decliners after the proposed merger between two insurance companies faced resistance. Executives at Nipponkoa expressed dissatisfaction with Sompo Japan merger. Investors have turned cautious after recent sharp gains in the commodities and benchmark indexes.[/R]

Stocks in Japan fell for the first time in three days dragged by financial stocks after the Asahi News reported that former executives of insurance company Nipponkoa Insurance Co are opposed to a merger with Sompo Japan Insurance.

The report notes that the merger is likely to benefit Sompo Japan Insurance at the expense of Nipponkoa.

In Tokyo trading Nikkei 225 Index declined 0.8% or 78.81 to 9,786.82, and the broader Topix Index shed 0.9% or 8.65 to 918.24.

In the first section of the Tokyo Stock Exchange 24.6 billion shares worth 1.5 trillion yen were traded and in the second section 828 million shares valued at 6.4 billion yen changed hands.

Of the Nikkei 225 index stocks, 53 rose, 165 dropped and 8 were unchanged. Pioneer Corp. led gainers in the index shares with a rise of 12.7%.

Japan to Halve Primary Budget Deficit

Yomiuri reported today that the government intends to halve primary deficit as a percentage of gross domestic product within five years.

Government will spell out its draft of basic policies for financial reconstruction this month. The draft will be submitted to the Council on Economic and Fiscal Policy meeting today and is expected to be endorsed by Cabinet by June 23.

Japan will lower the ratio of outstanding balance of debt and lower the primary balance against GDP.

The Organization of Economic Cooperation and Development forecasts government’s public debt will soar to 174% of GDP in 2009.

The government plans to submit the draft to the Council on Economic and Fiscal Policy meeting to be held today, and aims to have the plan endorsed at a Cabinet meeting June 23 following a consultation with the ruling parties.

Japan Coincident Index Rises to 85.8 in April

Cabinet Office reported today that the country’s coincident index, a measure the health of the economy rose to 85.8 in April from 84.8 a month ago. Economists had earlier forecasted the index to rise to 86.

The leading index eased to 76.5 from 75.5 a month earlier, while lagging index eased to 86.1 from 87.5 in March.

Gainers & Losers

Financial stocks fell on reports of fierce opposition by the former executives of Nipponkoa of the company’s proposed merger with Sompo Japan Insurance Co.

Mizuho Financial Group dropped 5%, Mitsubishi UFJ Financial Group dipped 3.1% and Bank of Yokohama declined 3.2%.

Commodity stocks fell as gold prices tumbled 1.1% to $952.5 per ounce and crude oil prices plunged 0.5% to $68.1 per barrel. Mitsui & Co. fell 3.7% and Nippon Mining House plummeted 3.2%.

Softbank Corp. rose 2.2% after announcing today the company will start offering the new model of iPhone from Apple on June 26.

Sony Corp decreased 0.9% or 25 yen to 2,685 yen after it completed 220 billion yen bond offering. The electronics maker priced 3-year 60 billion bonds yielding 0.945%, 5-year notes of 110 billion yen yielding 1.298% and 10-year bonds yielding 2.068%.

In the largest bond offering since the company’s founding in 1946, Sony is facing annual losses for the second year in a row after a series of missteps and focus on Hollywood movie production and lack of attention to its core business. Sony chief executive Howard Stringer has been ineffective in halting the company sales and release products that challenge iPhone and game players from Nintendo and Microsoft.

Nikkei 200 Average Movers

Mizuho Financial Group Inc led the decliners in the Nikkei 225 index of 5.0% followed by losses in Credit Saison Co. Ltd. of 4.9%, in Taiyo Yuden Co Ltd of 4.7%, in Mazda Motor Corporation of 4.7% and in Olympus Corp of 4.7%.

Pioneer Africa Corporation Limited led gainers in the Nikkei 225 index with a rise of 12.7% followed by gains in Clarion Co Ltd. of 10.7%, in Toho Co Ltd of 6.5% and Fuji Electric Holdings Co Ltd of 5.2%.