WK.2(12th - 15th January 2010)
1
Markets were closed in Japan for a national holiday on Monday but share prices rose when trading resumed on Tuesday following strong data from China showing booming demand for oil, copper and other commodities. Mitsubishi Corporation, Japan’s largest trading house, gained 2% and rival, Mitsui & Company, climbed 3%. Machinery makers also benefited. Komatsu, the world’s second biggest manufacturer of earth-moving equipment after Caterpillar of the US, leapt 5.4% while Hitachi Construction Machinery added 2.2%. Nippon Steel surged 5.1%. In the financial sector, banks were mixed as investors worried about their exposure to Japan Airlines (JAL), which seems increasing likely to be pushed into bankruptcy and then de-listed from the stock market. Mitsubishi UFJ, Japan’s top lender, advanced 2.1% but Mizuho Financial slid 1.7% and Sumitomo Mitsui Financial Group (SMFG) slipped 0.9%. JAL itself was untraded due to a flood of sell orders at Y37, down nearly 45% from Friday’s close. All Nippon Airways (ANA) jumped 4.2% on expectations of increased business in the wake of a JAL restructuring and Central Japan Railway was ahead 4% on speculation that it is the most likely candidate to replace JAL in the transportation and utilities sector in the event that the ailing carrier is de-listed. Elsewhere, Fast Retailing, owner and operator of the Uniqlo brand of discount clothing stores, slumped 5% following a downbeat assessment from Goldman Sachs. Overall, the Nikkei average closed up 0.8% at a new 15-month high of 10,879. The broader Topix index rose 1.4% to finish at 954.
2
Share prices gave back ground gained the previous day in trading in Tokyo on Wednesday after China raised bank reserve requirements to tighten monetary conditions and rein in surging asset prices. Although the move is unlikely to derail China’s economic recovery, fears that it will succeed in cooling excessive demand hit resource related issues and other companies reliant on the Chinese market. Ferronickel producer, Pacific Metals, dropped 4.7%, Toho Zinc slumped 3.8% and fellow smelter, Dowa Holdings, shed 3.3%. Komatsu fell 2.9% and Hitachi Construction Machinery slid 2.3%. Steel companies were also lower following a ratings downgrade on the sector by Credit Suisse. Nippon Steel, Japan’s biggest steel producer, lost 3.3%and rival, JFE Holdings, tumbled 5%. Exporters fared little better as the Yen again strengthened on foreign exchange markets and the US Dollar retreated to the Y91 level. Toyota, the world’s leading car manufacturer, declined 1.5% and electronic components maker, Kyocera, slipped 2.2%. Elsewhere, Japan Airlines (JAL), plummeted by its daily limit for a second consecutive session as investors dumped the stock wholesale on growing expectation that the ailing carrier is heading for bankruptcy and de-listing. And Best Denki plunged 18.6% after the consumer electronics retailer said that its net loss for the year to the end of March 2010 is likely to be 20 times bigger than previously forecast because of charges to be incurred from closing some 30% of its stores and liquidating a struggling subsidiary. The Nikkei average closed down 1.3% at 10,735. The more comprehensive Topix index was off by 1.1% to finish at 944.
3
A strong overnight performance by US technology shares on Wall Street helped Japanese stocks to regain their poise in trading in Tokyo on Thursday as investors shook off the previous day’s worries about China. Consumer electronics giant, Sony, added 2.6% and rival, Panasonic, leapt 6.1%. Electronic components manufacturer, Kyocera, advanced 2.4% and, among automakers, Toyota rose 2%. Trading houses rebounded from their losses of the previous day. Mitsubishi Corporation and Mitsui & company climbed 4.4% and 4.3% respectively. In the financial sector, Mizuho Financial, jumped 5.7% on rumours that it is considering a rights offering to boost capital. Mizuho, which is the worst-capitalised of Japan’s major banks, had been expected to raise fresh capital through the issue and sale of new shares. However, a rights offering would likely result in less dilution of shareholder value. Machine tool makers were bought on news that orders posted a year-on-year gain in December for the first time in 19 months. Okuma Corporation rocketed 13.7% and Makino Milling Machine soared 9.5%. Shipping companies also performed strongly. Mitsui OSK Lines surged 7.2% on reports that it made a Y10 billion profit in the three months to the end of December - a 500% increase over the previous quarter - thanks to robust demand from China, India and other developing countries for raw materials. Nippon Yusen, Japan’s biggest shipper, jumped 5.1% and Kawasaki Kisen leapt 7.4%. The Nikkei average closed up 1.6% at a new 15-month high of 10,908. The Topix index was also ahead 1.6% to finish at 959.
4
Quarterly results posted overnight by US chip giant, Intel, comfortably beat analysts’ expectations and brightened the mood in trading in Tokyo on Friday. Advantest, a world-leading manufacturer of chip test and production equipment for the semiconductor industry, added 2.6% and rival, Tokyo Electron, advanced 2.2%. TDK Corporation, a maker of hard-disk drives, also rose 2.6%. Indeed, electronic components manufacturers in general were lifted by a rating upgrade on the sector from Goldman Sachs, which expects supply to remain tight over the next few months supporting product prices. Murata Manufacturing leapt 6.7% and Nihon Dempa Kogyo soared 9.3%. Energy-related stocks, however, fell after oil prices declined for the fifth consecutive day. Refiner and distributor, Nippon Oil, slid 1.3% and Nippon Mining Holdings slipped 1.2%. Elsewhere, Shiseido, Japan’s largest cosmetics company, jumped 5.1% on news that it is buying California-based beauty products firm, Bare Escentuals, in a deal worth US$1.7 billion. Overall, the Nikkei average was ahead 0.7% to finish at yet another fresh 15-month high of 10,982. Indeed, the Nikkei has registered gains for the past seven weeks, its best run in nearly two years. The broader Topix index also climbed 0.8% to end the week at 966.
