Japan Rate on Hold; KDDI, Jcom Deal

123jump.com Staff
26 Jan, 2010
New York City

Bank of Japan left its key lending rate on hold and said it will keep its monetary policy accommodative to fight the deflationary forces. Service index declined 1.5%. KDDI purchased 38% stake in the broadband network Jupiter Telecom.

[R]5:00 AM New York, 7:00 PM Tokyo – Bank of Japan left its key lending rate on hold and said it will keep its monetary policy accommodative to fight the deflationary forces. Service index declined 1.5%. KDDI purchased 38% stake in the broadband network operator Jupiter Telecom.[/R]

Stocks in Tokyo trading closed sharply lower after the Bank of Japan left its key rate unchanged and investors worried that China may tighten lending soon. Loans in the first two weeks in China surged to 20% of the annual quota.

In Tokyo trading Nikkei 225 Stock Average fell 1.8% or 187.40 to 10,325.28, and the broader Topix Index declined 2% to 916.40.

In the first section of the Tokyo Stock Exchange 8.8 billion shares valued at 593 billion yen were traded and in the second section 235 million shares valued at 1.6 billion yen changed hands.

Of the Nikkei 225 index stocks, 21 rose, 198 fell, and 6 were unchanged. Mitsui & Co. led gainers in the index shares with a rise of 23.4% followed by Kyowa Kirin advancing 2.7%.

Bank of Japan Holds Rates at 0.1%

Bank of Japan reported today that it has elected to keep its key rate at 0.1% as conditions continue to improve. The central bank also said that the pace of improvement of the economy is likely to remain moderate until the middle of fiscal 2010.

The year-on-year rate of decline in consumer prices excluding food is expected to moderate as aggregate supply and demand balance improves gradually.

The BoJ noted in the accompanying statement that it is a “critical challenge” for Japan’s economy to fight deflation.

“In the conduct of monetary policy, the Bank will aim to maintain the extremely accommodative financial environment,” said the central bank.

Corporate Services Price Index Falls 1.5% in Dec

Separately, the central bank also said the Corporate Services Price Index fell 1.5% from a year earlier but remained unchanged from a month ago at 97.8.

Index for transport services rose 0.5%, other services up 0.1%, advertising services up 0.1%, information and communications up 0.04%, finance and insurance up 0.02% and real estate services increased by 0.02%.

Leasing and rental index was unchanged at 0.00%.

Japan Annual Wage Negotiations Begin

Nikkei News reported that the country’s annual wage negotiations began today, with the chairman of Japan Business Federation Nobuaki Koga noting employment security should take precedence over wage hikes.

However, the nation's largest labor union association Rengo maintained that the wage curve- emphasizing regular wage hikes based on age or service years- should be retained.

Japan’s influential business lobby Nippon Keidanren, has already expressed its intention to freeze periodic pay hikes and effectively allow pay cuts.

Finance Minister Targets 3% Growth in Two Years

The online edition also reported that finance minister Naoto Kan told the upper house budget committee Japan is targeting to achieve 3% nominal economic growth in two years.

Kan added that he forecasts Japan to exit deflation in a few years propped by interventions from the Bank of Japan.

KDDI Corp to Buy 37.8% Stake in Jupiter

KDDI Corp. said yesterday it will purchase 37.8% equity in Jupiter Telecommunications Co from Liberty Global Media based in the U.S. for 361.7 billion yen, or 139,500 yen per JCOM share, a 65% premium on Friday's closing price.

After the transaction, KDDI’s will shore its share of the domestic cable TV market to 50%.

Nikkei Movers

KDDI Corporation led the decliners in the Nikkei 225 Stock Average with a loss of 8.6% followed by losses in Hitachi, Ltd of 5.9%, in Resona Holdings, Inc of 5.8%, in Clarion Co Ltd 5.5% and in Panasonic Corporation 5.2%.

Mitsui & Co Ltd led gainers in the Nikkei 225 Stock Average with a rise of 23.4% followed by gains in Kyowa Hakko Kirin Co., Ltd 2.7%, in Toppan Printing Co Ltd of 2.4% and in The Yokohama Rubber Company, Limited of 2.2%.

Other Movers

KDDI Corporation fell 8.6% to ¥482,500.00.

Komatsu Ltd decreased 2.4% to ¥1,876.00.

Mazda Motor Corporation dropped 2.8% to ¥236.00 after the car exporter aims to expand its 2010 sales in China by 22% from the previous year to 220,000 units, a senior company official said Monday.

Nippon Telegraph and Telephone Corporation the fixed-line network operator fell 2.1% to ¥3,865.00.

Sony Corporation declined 4.7% to ¥3,000.00.