WK.1(4th - 8th January 2010)
1
Japanese shares had a positive start to the New Year on the first day of trading in Tokyo on Monday. Exporters benefited from a weaker yen with the US Dollar holding at around Y93 on foreign exchange markets. Consumer electronics and entertainment giant, Sony, added 2.3% and rival, Panasonic, advanced 1%. Among automakers, Toyota rose 0.3% and Honda gained 1.9%. Elsewhere, Japan Airlines (JAL) surged 31% from the record low hit on December 30th (the final trading day of 2009) after Transport Minister, Sieji Maehara, said that the state-owned Development Bank of Japan would double its credit line to the ailing carrier to Y200 billion. That should be enough to keep JAL afloat while the government works out details of a bail-out for Asia’s biggest airline. Overall, the Nikkei average closed up 1% at 10,655 - its highest finish since October 2008. The broader Topix index was also ahead 0.9% to end at 916.
2
Encouraging US manufacturing data helped Japanese stocks to a fresh 15-month high in trading in Tokyo on Tuesday. The Institute of Supply Management, a trade group of purchasing executives, reported overnight that its US manufacturing index rose for the fifth straight month to 55.9 in December and is now at its highest level since April 2006. A reading above 50 indicates growth. But gains were limited as the Yen strengthened and the Dollar slipped back below Y92 putting pressure on exporters. Panasonic rose 0.5% but Sony slid 0.4%. Toyota, the world’s largest automaker, shed 2.2% and Honda eased 0.8%. Among banks, however, Sumitomo Mitsui Financial Group (SMFG) climbed 1.5% after it declined to confirm rumours that it is planning to raise up to Y800 billion in new funding by selling shares. And Japan Airlines (JAL) added another 2.3% on news that more than two-thirds of its employees have agreed to proposed cuts in their pension entitlements, clearing a key hurdle to reduce its pensions liability, which is itself a prerequisite for any state bail-out. The Nikkei average closed up 0.3% at 10,682 while the Topix index advanced 0.4% to finish at 920.
3
Japanese stocks again edged higher in trading in Tokyo on Wednesday after better-than-expected data on US factory orders released overnight provided more evidence of global economic recovery. Exporters were also helped by a slight easing of the Yen as the US Dollar pushed back above the Y92 level on foreign exchange markets. Sony was ahead 0.9% and Nintendo surged 6.9% on news that US sales of its Wii video games console hit a record high of 3 million units in December. Among automakers, Toyota added 2.5% after it, too, reported that US sales in December increased 32% compared to the same month a year ago. Honda, however, slipped 0.2%. In the financial sector, banks performed strongly. Mitsubishi UFJ, Japan’s top lender, gained 4.4% while Mizuho Financial leapt 6.1% and Sumitomo Mitsui Financial Group (SMFG) jumped 5.5%. Resource-related issues were also in favour after oil prices rose above US$82 per barrel and prices for copper and other industrial metals also increased. Among trading houses, Mitsubishi Corporation climbed 2.2%, Mitsui & Company advanced 1.5% and Itochu moved up 1.7%. Japan Airlines, however, slumped 6.7% on reports that the state-backed Enterprise Turnaround Initiative Corporation (ETIC) has proposed a court-led bankruptcy procedure as the quickest and most transparent way to restructure the heavily indebted carrier and that both the Ministry of Finance and the airline’s largest creditor, the Development Bank of Japan, support this view. News that Japan’s elderly Finance Minister, Hirohisa Fujii, plans to resign for health reasons had little immediate impact, although there is keen interest in who will be chosen by Prime Minister, Yukio Hatoyama, to replace him. Overall, the Nikkei average closed up 0.5% at 10,731. The more comprehensive Topix index was ahead 1.3% to finish at 931.
4
Japanese share prices drifted generally lower in trading in Tokyo on Thursday. Printer/copier and digital camera manufacturer, Canon, shed 2.5% following a rating downgrade from Credit Suisse. And Japan Airlines (JAL) tumbled another 9.5% on rumours that it will post a full year loss of US$13.3 billion due to a huge restructuring charge. The Enterprise Turnaround Initiative Corporation (ETIC) is said to be ready to inject up to Y300 billion in fresh capital into the ailing carrier if it files for bankruptcy and its banks agree to write off at least some of its loans. Resource-related issues, however, remained in favour among investors. Sumitomo Metal Mining and Dowa Holdings, another leading smelter, both added 1.5%. But trading houses were flat. Mitsubishi Corporation was unchanged and Mitsui & Company rose just 0.1%. The Nikkei average closed down 0.5% at 10,682. The Topix index finished marginally higher at 932.
5
The US Dollar hit a four-month high and headed towards Y94 in trading on Friday following remarks the previous day from newly appointed Finance Minister, Naoto Kan, calling for the Japanese currency to weaken. However, the greenback later gave back some ground after Mr Kan distanced himself from his own comments and said “currency levels should be determined by markets.” Investors were also cautious ahead of the three-day weekend and the release of key data later in the day that is expected to show that the US economy stopped shedding jobs in December. But exporters and automakers, in particular, performed well. Toyota added 2.9%, Nissan gained 2.2% and Honda climbed 3.1%. Semiconductor-related issues were also in favour amid signs of increasing global demand for high-tech products. Advantest, one of the world’s leading manufacturers of chip test and production equipment, jumped 3.7% and rival, Tokyo Electron, advanced 2%. Japan Airlines (JAL), however, dropped a further 11.8% on increasing speculation that the ailing will be forced to file for bankruptcy in the next week or so. Overall, the Nikkei average closed up 1.1% at 10,798 for a rise of 2.4% over the week and the sixth straight week of gains. The broader Topix index ended 1% higher at 941.
