Japan Index Retreat on Strong Yen, China Worries

123jump.com Staff
27 Aug, 2009
New York City

Strong yen and the talks of China curbing overcapacity in several industries dragged the benchmark index lower from the 11-month high. Three mobile handset makers are discussing merger. Nippon Sheet Glass drops 7% after its chief executive resigns abruptly.

[R]9:00 PM Tokyo – Strong yen and the talks of China curbing overcapacity in several industries dragged the benchmark index lower from the 11-month high. Three mobile handset makers are discussing merger. Nippon Sheet Glass drops 7% after its chief executive resigns abruptly.[/R]

A growing circle of investors in Japan and around the world are worried that market valuations in Japan and Asia have stretched that can be supported by economic fundamentals.

Investors grew more cautious after China hinted that it will study the overcapacity in several industries including cement, steel and glass and strong yen.

The Nikkei 225 Index in Tokyo closed lower 165.74 or 1.56% to 10,473.97 and the broader Topix index decreased 1.2% to 964.23. The yen closed at 93.40 against a dollar and at 134.01 against one euro.

Of the stocks in the benchmark index, 28 increased, 193 decreased and 4 were unchanged.

The stocks of international trading companies, metals and mining companies and shipping liners fell.

The global solar cell market is expected to surge to 10 trillion yen according to research firm Fuji Keizai Co from 2 trillion in 2008. The sharp is rise is expected as technology advances and Chinese and other manufacturing capacity lowers the unit cost.

Gainers & Losers

Mitsubishi Corp decreased 2.1% to 1,882 yen and Mitusi & Company declined 2.8% to 1,226 yen. Marubeni Corp decreased 3% to 463 yen.

Sumitomo Metal Industries Ltd declined 2.9% to 236 yen and Sumitomo Chemical dropped 2.6% to 449 yen.

Nippon Sheet Glass dropped 7.2% to 334 yen after it chief executive Stuart Chambers resigned without citing any business reason.

Nippon Yusen K.K. decreased 2.4% to 399 yen and Mitsui O.S.K lost 1.6% to 572 yen.

Exporters declined. Citizens Holdings decreased 2.3%, Cannon Inc declined 2.2% and Casio Computer fell 1.5%. Toyota Motor dropped more than 1.7% to 4,040 yen.

Kobe Steel Ltd decreased 2.7% to 177 yen and JFE Holdings declined 3.2%.

The telecom stocks on the expectations of future price war. NTT DoCoMo, KDDI and Softbak edged lower.

Three cell phone makers are expected to merge their operations according to a report by Yomiuri newspaper. NEC Corp, Hitachi Ltd and Casio Computer Co are discussing the possibilities of merging their cell phone business with 50% controlled by NEC. The merged companies will have 20% market share following Sharp with 22%.

Nikkei 200 Average Movers

Nippon Sheet Glass Co Ltd led the decliners in the Nikkei 225 index of 7.2% followed by losses in Chiyoda Corp of 5.0%, in Mitsumi Electric Co Ltd of 4.9%, in Daikin Industries Ltd of 4.4% and in Mitsui Chemicals Inc of 4.0%.

Taiheiyo Cement Corp led gainers in the Nikkei 225 index with a rise of 4.4% followed by gains in DOWA Holdings Co Ltd of 3.2%, in IHI Corp of 2.1% and in Sumitomo Osaka Cement Co Ltd of 2.0%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 165.74 or 1.56% to 10,473.97, Hang Seng index in Hong Kong decreased 213.57 or 1.04% to 20,242.75 and CSI 300 index in China lower 16.08 or 0.51% to 3,156.30. ASX 200 index in Australia decreased 3.70 or 0.08% to 4,450.80. The FTSE Bursa KL Composite index in Malaysia closed higher 4.34 or 0.37% to 1,176.90.

The Kospi Index in South Korea decreased 14.79 or 0.92% to close at 1,599.33. SET index in Thailand closed lower 5.88 or 0.89% to 652.40 and JSE Index in Indonesia decreased 24.02 or 1.01% to 2,356.06. The Sensex index in India increased 11.22 or 0.07% to 15,781.07.