Japan Seeks $81 B of Stimulus; Stocks Decline

Darlington Musarurwa
08 Dec, 2009
New York City

Japan to unveil 7.2 trillion yen or $81 billion additional stimulus that will offer a mix tax rebate, increased loans to small businesses and support to the struggling job market. Bankruptcies fall 11.4% in November in Japan. Current account surplus in October increased 43%.

[R]5:00 AM New York, 7:P00 PM Tokyo - Japan to unveil 7.2 trillion yen or $81 billion additional stimulus that will offer a mix tax rebate, increased loans to small businesses and support to the struggling job market. Bankruptcies fall 11.4% in November in Japan. Current account surplus in October increased 43%.[/R]

Japanese stocks fell 0.3% on weaknesses in the U.S. after U.S. Federal Reserve chairman Ben Bernanke said downside risks to the economy still remain.

In Tokyo trading Nikkei 225 index fell 0.3% or 27.13 to 10,140.47, and the broader Topix Index slipped 0.3% to 896.70.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 584 billion yen were traded and in the second section 297 million shares valued at 3.2 billion yen changed hands.

Of the Nikkei 225 index stocks, 47 rose, 70 dropped, and 16 were unchanged. Yahoo Japan Corp. led gainers in the index shares with a rise of 5.2% followed by Denki Kagaku gaining 3%.

Fed Chairman Bernanke yesterday stressed that the Fed has a plan to unwind the large stimulus and it will “not” be inflationary. Investors are increasingly worried about the inflationary pressures in the years to come.

Japan Unveil 7.2 trillion yen Stimulus

Nikkei News reported that Japan today unveiled a 7.2 trillion stimulus in spending to arrest the deepening economic recession.

The spending plan also considers new debt issuance.

According to the report, finance minister Hirohisa Fujii said the government will decide on December 15 on the outline of the second extra budget for the current fiscal year ending in March to pay for the first stimulus package.

Under the stimulus plan, financial support will be available to small companies, aid for rural economies, and incentives to spur demand for energy efficient cars, electronics and homes that consume less electricity.

Government will provide direct assistance of 3.5 trillion yen in spending to the provinces and 3 trillion yen to cover tax income declines.

The spending of 600 billion yen will be channeled to improve the job market, while 800 billion will be for “environment-related measures.” In addition, the government will spend 1.2 trillion to help companies raise funds and militate against the effects of deflation.

The government will issue new securities of 9.3 trillion yen.

Government will submit the supplementary bill to parliament in January.

Japan Bankruptcies Fall 11.4% in November

Tokyo Shoko Research Ltd. reported today the number of companies entering bankruptcy with debts more than 10 million yen decreased 11.4% to 1,132 in November from a year ago period.

Bankruptcies declined after financial institutions increased lending and offered emergency guarantee programs.

Current Account Surplus Rises 42.7% in November

Ministry of Finance reported today that the country’s current account surplus increased 42.7% to 1.4 trillion yen in October from a year ago.

Economists had earlier projected the surplus to widen to 1.48 trillion yen.

Gainers & Losers

Yahoo Japan Corp led gainers in the Nikkei 225 index stocks with a rise of 5.2% followed by increases in Denki Kagaku of 3%, in Unitika Ltd. of 2.9%, in CSK Holdings Corp. of 2.8%, and Sumitomo Osaka of 2.8%.

Shinsei Bank led decliners in Nikkei 225 index stocks with a fall of 6.4% followed by losses in Nippon Yusen of 5.7%, in Clarion Co. Ltd. of 5.6%, in Kawasaki Kisen of 5.4%, and T&D Holdings of 5.4%.