Japan Election Scheduled; Stocks Drop 2.6%

Mukesh Buch
13 Jul, 2009
New York City

The ruling LDP party in Japan faces uphill task on the election scheduled on August 30. The opposition party DPJ controls the upper house of the National Diet and is favored to win the election. Stocks fell on the election uncertainty. Kirin and Suntory are reported in merger talks.

[R]7:00 PM Tokyo, 5:00 AM New York – The ruling party faces uphill task on the election scheduled on August 30. The opposition part DPJ controls the upper house of the Diet and is favored to win the election. Stocks fell on the election uncertainty. Kirin and Suntory are reported in merger talks.[/R]

Japanese Prime Minister Taro Aso today declared that the lower house of parliament will be dissolved before the end of this month and general elections will be held on August 30.

The ruling party is trailing behind in opinion polls and the opposition party DPJ is favored by voters. The DPJ already controls the upper house of the parliament. The control of both houses will provide some stability in the government operations and clarity in future policy but the DPJ is generally considered to have policies that are not favorable to big businesses.

Japanese stocks fell on the election uncertainties and weak regional trading sentiment.

The Nikkei 225 Index in Tokyo closed lower 236.95 or 2.55% to 9,050.33 and yen edged lower by 0.44 yen to 92.30 against a dollar. Stocks in Japan declined for the ninth session in a row.

Gainers & Losers

In trading, Nikkei 225 Stock Average opened lower and attempted to rally only one time by 10:00 am but failed to sustain on the gains. After 11:00 am the stocks steadily lost ground and closed sharply lower in the final hour of trading.

Kirin Holdings Company and privately held Suntory Holdings are in merger talks according to a report from Nikkei.

Sapporo Holdings and Asahi Breweries closed sharply higher on the merger news.

Nikkei 200 Average Movers

Pioneer Corp led the decliners in the Nikkei 225 index of 15.7% followed by losses in CSK Holdings Corporation of 12.2%, in Fuji Electric Holdings Co Ltd of 10.2%, in Alps Electric Co Ltd of 9.1% and in Mizuho Securities Co Ltd of 8.6%.

Kirin Holdings Co Ltd led gainers in the Nikkei 225 index with a rise of 7.8% followed by gains in Sapporo Holdings Ltd of 6.1%, in Asahi Breweries Ltd of 2.5% and Daiichi Sankyo Co Ltd of 2.3%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 236.95 or 2.55% to 9,050.33, Hang Seng index in Hong Kong decreased 453.79 or 2.56% to 17,254.63 and CSI 300 index in China decreased 37.30 or 1.10% to 3,361.01. ASX 200 index in Australia decreased 56.60 or 1.49% to 3,737.50. The FTSE Bursa KL Composite index in Malaysia closed lower 4.10 or 0.38% to 1,063.66.

The Kospi Index in South Korea decreased 50.50 or 3.53% to close at 1,378.12. SET index in Thailand closed lower 3.48 or 0.61% to 562.55 and JSE Index in Indonesia decreased 42.96 or 2.08% to 2,020.14. The Sensex index in India decreased 103.90 or 0.77% to 13,400.32.