Japan Q2 GDP Rise 4.8%; Hitachi Falls

Darlington Musarurwa
16 Nov, 2009
New York City

Japan

[R]5:00 AM New York, 7:00 PM Tokyo – Japan’s GDP in fiscal second quarter ending in September increased 4.8% from a year ago, surprising most economists and investors. Hitachi Ltd plans to raise 300 billion yen and Mitsubishi UFJ is looking to raise 1 trillion yen.[/R]

Asian markets closed higher after 21-member Asia-Pacific Economic Cooperation group agreed to keep economic stimulus in place until the economy recovers to a sound footing.

Japanese stock indexes were mixed as investors digested a surprise rise in third quarter GDP growth and share sale from Hitachi and Mitsubishi UFJ.

Mitsubishi UFJ is planning a share sale of about 1 trillion yen, while Hitachi intends to raise about 300 billion yen.

In Tokyo trading Nikkei 225 Index rose 0.2% or 20.87 to 9.791.18, and the broader Topix Index fell 0.7% to 860.42.

In the first section of the Tokyo Stock Exchange 8.7 billion shares worth 523 billion yen were traded and in the second section 343 million shares valued at 4.1 billion yen changed hands.

Of the Nikkei 225 index stocks, 80 advanced, 133 declined, and 12 were unchanged. Marui Group led gainers in the index shares with a rise of 6.9% followed by Denki Kagaku jumping 5.5%.

Regional banks also gained. Fukuoka Financial increased 3.1% to 334 yen, Shizuoka Bank edged up 3% to 892 yen and Bank of Yokohama climbed 1.9% to 435 yen.

The yen fell 0.8% to 89.56 against the dollar from 89.53.

Japan’s GDP Rises 4.8% in September

Cabinet Office in Japan reported gross domestic product rose 4.8% in the three months to September from a year earlier. Economists had earlier forecasted 2.9% increase.

Domestic demand gained 3.3% from a year ago and private demand jumped 4.2% in the period.

The report notes that private consumption advanced 2.8%, while consumption of households increased 2.9%.

However, private residential investment declined 27.5% and private non-residential investments soared 6.6%.

In addition, public demand edged up 0.3%.

BoJ Governor Acknowledges Risk of Low Interest Rates

Nikkei News reported Bank of Japan Governor Masaaki Shirakawa said at an industry gathering in Tokyo today that keeping interest rates low might increase the fiscal burden, prompting adjustments to the government’s balance sheet.

“If the continuation of low interest rates (in the U.S.) leads to a substantial rise in long-term interest rates by raising inflation expectations or by generating expectations for a weak dollar, this may give rise to another problem,” said Shirakawa.

Hitachi Plans $4.6 billion Offering

Hitachi Ltd. reported today the company will raise 300 billion yen in stock and bond offerings.

The company intends to sell 100 billion yen in convertible bonds, while the remainder will be raised through a public offer of new stock.

Nomura estimated that the stocks might be sold at a 3% to 5% discount.

Mitsubishi UFJ in 1 trillion yen Share Sale

Bloomberg News reported today Mitsubishi UFJ Financial Group hired JPMorgan Chase & Co, Nomura Holdings and Morgan Stanley to manage the sale of 1 trillion offering.

According to the report, the sale will be announced on Wednesday when the company presents its interim financial results.

Mitsubishi intends to sell 2.5 billion in common shares, with Mitsubishi UFJ Securities Co. arranging the sale.

Gainers & Losers

Marui Group led gainers in the Nikkei 225 index shares with a rise of 6.9% followed by increases in Denki Kagaku of 5.5%, in Chiba Bank of 5.4%, in Fast Retailing of 5.2%, and Minebea Co. Ltd of 3.2%.
Mitsui Chemicals led decliners in the Nikkei 2w25 index shares followed by losses in Hitachi Ltd. of 8.5%, in OKI Electric Industries of 7.4%, in GS Yuasa Corp. of 6.7%, and Sumitomo Mitsui Financial Group of 5.9%.

Hitachi Ltd fell on news it’s planning a 300 billion share sale.

Financial stocks fell. Mitsubishi UFJ Financial Group advanced 5.5% to 480 yen, Mizuho Financial jumped 3.9% to 172 yen and Resona Holdings increased 3.9% to 990 yen.