BoJ Left Rates Unchanged; Debt Warning

Darlington Musarurwa
18 Feb, 2010
New York City

Bank of Japan left its key rate unchanged at 0.1% and kept its bond purchase plan intact. Governor Shirakawa also offered his strongest warning and urged government to curb the rising debt. Stocks in a listless trading searched for a direction and barely closed up. Electronics makers closed up.

[R]5:00 AM New York, 7:00 PM Tokyo – Bank of Japan left its key lending rate unchanged at 0.1% and kept its bond purchase plan intact. Governor Shirakawa also offered his strongest warning and urged government to curb the rising debt. Stocks in a listless trading searched for a direction and barely closed up. Electronics makers closed higher.[/R]

Stocks in Tokyo trading searched for a direction and closed up barely. In the session the benchmark index increased at least fifteen times and declined at least nineteen times.

Shippers and steelmakers struggled after leading the gainers for two days in a row. Gains were pared by profit taking after stocks rallied more than 3% on Wednesday.

In Tokyo trading Nikkei 225 Stock Average gained 0.3% or 28.86 to 10,335.69, and the broader Topix Index edged up 0.1% to 904.73.

In the first section of the Tokyo Stock Exchange 16.6 billion shares worth 1.1 trillion yen were traded and in the second section 181 million shares valued at 2.6 billion yen changed hands.

Of the Nikkei index stocks, 131 increased, 76 declined and 18 were unchanged. Clarion Co Ltd led gainers in the index shares with a rise of 9% followed by Shinsei Bank Limited jumping 6.9%.

Willcom Files For Bankruptcy

Nikkei News reported today that the personal handyphone system Willcom Inc filed for bankruptcy protection with the Tokyo District Court dragged by debts totaling 173 billion yen at end of September.

The company’s debt is believed to be the largest ever among telecom carriers.

However, the company targets to rebuild itself with assistance from the state-backed Enterprise Turnaround Initiative Corp. of Japan, Softbank Corp. and investment fund Advantage Partners LLP.

Willcom will not discontinue services to nearly 4.2 million subscribers.

Shirakawa Opposes Binding Inflation Target

Bank of Japan left its key lending rate unchanged at 0.1% and did not alter its plan to buy bonds.

Bank of Japan Governor Masaaki Shirakawa in a statement urged the government to take concrete steps to curb the government debt. He added “fiscal consolidation” will gain financial markets trust.

Shirakawa statement is the strongest indication that the central bank is fighting the pressures from Finance Minister Kan to target 1% inflation rate and provide more stimulus.

Finance minister Kan earlier in the week urged the central bank to offer more lending and said that the central bank should target inflation rate of 1%.

Nikkei Movers

Sapporo Holdings Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 3.1% followed by losses in Unitika Ltd of 2.9%, in Showa Denko K.K of 2.2%, in Fukukawa Co Ltd 2.0% and in The Japan Steel Works Ltd 1.8%.

Clarion Co Ltd led gainers in the Nikkei 225 Stock Average with a rise of 9.0% followed by gains in Shinsei Bank, Limited 6.9%, in Pioneer Corp of 5.4% and in Fuji Electric Holdings Co., Ltd 3.8%.

Other Movers

Clarion Co increased 9% to ¥145.00 and the car audio company will start producing car navigation systems in Mexico in August according to a statement on its Web site on Feb 16.

Itoki Corp rose 7.8% to ¥193.00 after the maker of office furniture and equipment said it expects to return to a profit of ¥100 million ($1.1 million) this fiscal year from a net loss of ¥8.27 billion.

Kaneka Corp dropped 3.1% to ¥527.00 after the maker of electron tubes and semiconductors was downgraded to “neutral” from “buy” by UBS AG.

Net One Systems Co., Ltd gained 5.7% to ¥98,200.00 after the communications-network designer was upgraded to “buy” from “hold” at KBC Securities.

NEC Electronics Corp surged 5.6% to ¥845 following better than expected earnings from Hewlett Packard in New York after the close. Other electronics makers increased as well.

Steelmakers and shippers declined after leading gainers yesterday. Mitsui OSK declined 1.2% to ¥577 and Kobe Steel dropped 1.8% to ¥161.

Tokyo Seimitsu Co rose 2.1% to ¥1,242.00 after the maker of chip manufacturing equipment was upgraded to “outperform” from “market perform” at Mitsubishi UFJ Financial Group Inc.

Tonami Holdings Co rose 4.5% to ¥185.00 after the logistics company was upgraded to “buy” from “hold” at Citigroup Global Markets Japan Inc.