Japan Economic Growth Lowered; Suzuki Up

Darlington Musarurwa
09 Dec, 2009
New York City

The fiscal second quarter economic growth was revised downward to annual rate of 1.3% from 4.8% in the previous estimate. Japan plans to issue 44 trillion yen bonds in 2010. Suzuki sold 20% stake in Volkswagen AG and plans to use part of the proceeds to repay debt.

[R]5:00 AM New York, 7:00 PM Tokyo – The fiscal second quarter economic growth was revised downward to annual rate of 1.3% from 4.8% in the previous estimate. Japan plans to issue 44 trillion yen bonds in 2010. Suzuki sold 20% stake in Volkswagen AG and plans to use part of the proceeds to repay debt.[/R]

Japan stock indexes dropped 1.3% as the country’s economy grew less-than-forecasted in the three months to September.

In Tokyo trading Nikkei 225 Index fell 1.3% or 884.94 to 10,004.72, and the broader Topix Index fell 1.3% to 135.75.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 600 billion yen were traded and in the second section 595 million shares valued at 4.5 billion yen changed hands.

Of the Nikkei 225 index stocks, 24 gained, 186 fell, and 15 were unchanged. Sanyo Electric led gainers in the index shares with a rise of 5.3% followed by Yahoo Japan Corp. increasing 4.9%.

Gas companies advanced. Osaka Gas Co. jumped 1.3% to 323 yen and Tokyo Gas Co. edged up 1.1% to 371 yen.

Suzuki Motor Company and Volkswagen AG agreed invest in each other and develop automotive technologies in collaboration. VW agreed to invest $2.5 billion or 222.5 billion yen in Suzuki to acquire 19.9% stake. Suzuki will invest 50 billion yen and acquire 1.3% stake in VW.

Japan’s GDP Eases to 0.3% in September

Japan’s cabinet office reported the country’s real gross domestic product was revised downwards to 0.3% from the previous 1.2% initially estimated on November 16.

In annualized terms, growth eased to 1.3% growth from the previously estimated 4.8% rise.

Private consumption increased to 0.9% from 0.7%, while domestic demand fell 0.1% from a rise of 0.8% previously forecasted. Private demand was downgraded to 0.1% from 1% and consumption of households gained 0.9% from 0.7%.

Private residential investment plunged a revised 7.9% from a drop of 7.7%, and private non-residential investment dropped 2.8% from an earlier estimate for a 1.6% growth.

The GDP deflator, which represents overall change in price levels, declined 0.5%, rather than a rise of 0.2% as indicated in the preliminary report.

Japan to Issue 44 trillion Yen Bonds in 2010

Nikkei News reported today Japan’s Chief Cabinet Secretary Hirofumi Hirano said government may issue new government bonds worth 44 trillion yen in fiscal 2010.

“Amid this sharp drop in tax revenues, it is not good if it becomes financially difficult for us to realize what we promised to the public in the manifesto when we lay out our next action plan,” said Hirano.

Delta Execs Meet Japan Transport Minister

Japan Today report that executives of Delta Airlines met with Japanese transport minister Seiji Maehara today to discuss their proposed long-term investment in struggling Japan Airlines Corp.

The transport minister will also meet executives from American Airlines next week, which proposed to invest $1.1 billion in JAL.

Gainers & Losers

Sanyo Electric led gainers in the Nikkei 225 index stocks with a rise of 5.3% followed by gains in Yahoo Japan Corp. of 4.9%, in Suzuki Motor of 3.5%, in Pioneer Corp. of 3.2%, in Aeon Co. Ltd of 3%.

Chiyoda Corp. led decliners in the Nikkei 225 index stocks with a fall of 6.5% followed by losses in T&D Holdings of 5.7%, in CSK Holdings Corp. of 5.5%, in Kajima Corp. of 5.4%, and OKI Electric Industries of 5.2%.

Financial stocks fell. Mitsubishi UFJ Financial Group dropped 5.2% to 477 yen and Nomura Holdings tumbled 4.8% to 662 yen.

Suzuki Motor increased 3.5% to 2,370 yen after the company sold 20% stake to Volkswagen AG of Germany.