Cabinet in Japan Approves Budget; Shippers Fall

Darlington Musarurwa
15 Dec, 2009
New York City

The Cabinet Office in Japan approved the second budget of $80 billion and to provide access to additional financing to small businesses. The latest survey of businesses suggests more companies are lowering wages in Japan. Shipping lines and resource stocks led the decliners in Tokyo trading.

[R]5:00 AM New York, 7:00 PM Tokyo – The Cabinet Office in Japan approved the second budget of $80 billion and to provide access to additional financing to small businesses. The latest survey of businesses suggests more companies are lowering wages in Japan. Shipping lines and resource stocks led the decliners in Tokyo trading.[/R]

Japan market averages fell 0.2% as shipping lines decline on a sustained fall in ocean freight rates index for the third day in a row and energy stocks decreased as crude oil prices edged lower below $70 a barrel.

Baltic Freight Rate Index in London has been on a decline since it reached a peak in November. The index has fallen consistently from the peak of 4,661 and decreased another 1.3% today to 3,530.00.

The index is still up from the low of 772 in the beginning of the year and reached the peak of 4,291 in June and has since then struggled to stay above 4,000. The index reached a record high in May of 2008 at 11,700 and dropped nearly 93% to its lowest to 663 in December of 2008.

In Tokyo trading Nikkei 225 Index dropped 0.2% or 22.2 to 10, 083.48, and the broader Topix Index fell 0.1% to 884.63.

In the first section of the Tokyo Stock Exchange 10.4 billion shares worth 565 billion yen were traded and in the second section 259 million shares valued at 2.6 billion yen changed hands.

Of the Nikkei 225 index stocks, 80 rose, 123 dropped, and 22 were unchanged. Sumitomo Realty led gainers in the index shares with a rise of 4.6% followed by NSK Ltd. rising 4.3%.

Japan Approves Second Stimulus Budget

Nikkei News reported that Prime Minister Yukio Hatoyama''s Cabinet today approved an additional budget plan for fiscal 2009.

The extra budget for the year through March 31 will finance a 7.2 trillion yen stimulus package, employment subsidies, incentives for consumers to buy environmentally friendly products and expanded credit guarantees for small and midsize firms.

The report notes that the budget will increase the public debt to 53.5 trillion yen.

A draft of the budget will be submitted for approval to the regular Diet session starting in January.

Government intends to use non-tax revenue such as reserves in special accounts, instead of increasing issuance of new government bonds, to draw up the annual budget prioritizing four areas of childrearing, employment, environment and science and technology.

Japanese Companies Cut Wages

Japan’s Ministry of Health, Labour and Welfare indicated that 12.9% of companies in its survey had lowered average wages or are planning to lower them, up from 9.8% a year ago.

A survey of 3,176 companies showed that 23.4% of construction companies surveyed had implemented pay cuts, while 18.2% of companies in the retail and wholesale sector, 16.9% in the hotel and restaurant sector and 14% in the manufacturing sector are looking to lower the employment cost.

Gainers & Losers

Sumitomo Realty led gainers in the Nikkei 225 index stocks with a rise of 4.6% followed by gains in NSK Ltd. of 4.3%, in Hitachi Ltd of 4.2%, in Nisshinbo Holdings of 3.8%, and Furukawa Ltd. of 3.5%.

Shimuzu Corp. led decliners in the Nikkei 255 index stocks with a fall of 3.5% followed by losses in Taiheiyo Cement of 2.9%, in Unitika Ltd. of 2.9%, in Konami Corp. of 2.8%, and Nippon Sheet Glass of 2.8%.

Other Movers

Inpex Holdings Inc the energy explorer and refiner declined 1.5% to ¥649,000

Japan Petroleum Exploration Co., Ltd dropped 1.9% to ¥4,060 after the oil driller said it has won its bid to develop the Gharaf oil field in southern Iraq, with the Tokyo based firm taking a 30% stake.

Shipping lines dropped. Nippon Yusen slumped 1.9% to 257 yen and Mitsui O.S. K. Lines plunged 1.5% to 458 yen.

Mitsubishi Estate Company, Limited the property developer added 2.8% to ¥1,469.00 and Mitsui Fudosan Co., Ltd gained 2.1% to ¥1,559.00.

Secured Capital Japan Co., Ltd surged 11.5% to ¥96,300 after the real estate investment business said it planned to buy the Pacific Century Place building in central Tokyo in a deal that could be worth as much as $1.6 billion according to media reports in Tokyo.