WK.3(18th - 22nd January 2010)
1
Japanese share prices retreated in trading in Tokyo on Monday amid political uncertainty over a funding scandal linked to Ichiro Ozawa, secretary-general of the ruling Democratic Party of Japan (DPJ) and widely viewed as the power behind Prime Minister, Yukio Hatoyama. A former aide to Ozawa has already been arrested and investors are concerned that the on-going investigation could hamper parliamentary debate on a supplementary budget. Disappointing results from J P Morgan Chase released over the weekend also weighed on the market and prompted a rash of profit-taking. Mitsubishi UFJ, Japan’s biggest bank, and rival, Mizuho Financial, both shed 1.6%. Consumer electronics giant, Panasonic, slipped 1.2% while automaker, Nissan, fell 2.6% and industrial robot manufacturer, Fanuc, slid 2.1%. Trading houses also declined on weaker prices for commodities. Mitsubishi Corporation dropped 2.8% and Sumitomo Corporation was off by 1.6%. Elsewhere, Nippon Oil slumped 2.9% after Iraq’s Oil Minister said on Sunday that a consortium led by the Japanese refiner is dragging its feet in talks to develop the Nassiriya oil field and insisted that a deal has to be done by January 24 or Iraq would proceed on its own. Overall, the Nikkei average closed down 1.2% at 10,855. The broader Topix index eased 0.9% to finish at 958.
2
Japanese stocks continued to slide in trading in Tokyo on Tuesday. The Yen hit a one-month high against the US Dollar on foreign exchange markets, putting pressure on exporters. With Japan Airlines (JAL) set to file for one of the nation’s largest-ever bankruptcies later in the day, there was speculation that this could prompt a repatriation of flows into the Japanese currency. Panasonic dropped 2.6% while printer/copier and digital camera manufacturer, Canon, slipped 1.4%. Among automakers, Toyota shed 1.2% and Honda fell 2.1%. However, heavy machinery conglomerate, Hitachi, rose 2.7% on a rating upgrade from Nomura Securities, which cited its stronger financial position following a successful fund-raising in December. Semiconductor-related issues suffered from declining prices for memory chips. Elpida Memory tumbled 4.5% and NEC Electronics eased 1.7%. Japan Airlines (JAL) remained unchanged but has already lost more than 90% of its market capitalisation since the start of the year two weeks ago. The Nikkei average closed down 0.8% at 10,765. The Topix index similarly dipped 0.8% to finish at 950.
3
Share prices again drifted lower in trading in Tokyo on Wednesday with foreign investors becoming net sellers for the first time since late December. Recent gains by Japanese stocks have been driven mainly by foreign purchases, which surged to Y733 billion in the first week of January, the highest level since July 2007, according to data from the Ministry of Finance. Any sign that foreign investors are once more turning bearish would, therefore, be cause for concern. Brokerages and securities houses were sold with sentiment further depressed after Credit Suisse downgraded its rating on the sector. Nomura, Japan’s largest brokerage dropped 3.8%, Matsui Securities fell 3.7% and Daiwa Securities shed 2.4%. Shipping firms were also out of favour after the Baltic Dry Index (BADI), which tracks rates to ship dry bulk goods, declined 2.6% in London overnight. Nippon Yusen, Japan’s biggest shipper, slid 1.5% and Kawasaki Kisen slumped 4%. Elsewhere, Japan Tobacco tumbled 4.1% on news that Norway’s US$450 billion sovereign wealth fund accumulated from North Sea oil revenues has decided to sell its holdings in 17 tobacco companies, including Japan Tobacco, for ethical reasons. In contrast, Toyota Trading jumped 6% following the announcement of a joint venture with Australian mining company, Orocobre, to develop a lithium production project in Argentina. Overall, the Nikkei average closed down 0.3% at 10,738. The more comprehensive Topix index lost 0.5% to finish at 945.
4
A slight softening of the Yen towards Y92 against the US Dollar provided a boost to exporters and other technology stocks in trading in Tokyo on Thursday. Consumer electronics and entertainment giant, Sony, added 4.1% and TDK, a leading maker of hard disk drives, jumped 4.8% after Citicorp upgraded its rating on the company citing strong demand for personal computers and low inventory levels. However, Pioneer fell 3.9% on reports that it is withdrawing its application for publicly-funded support and will instead try to raise some Y20 - 30 billion in fresh financing through a share issue. Among automakers, Toyota rose 2.1% and Honda advanced 1.7%. Semiconductor-related issues also performed strongly. Advantest, the world’s biggest manufacturer of chip test and production equipment, gained 3.6% and Nikon, which makes steppers, climbed 2.7%. Shin-Etsu Chemical, the world’s largest manufacturer of silicon wafers, was ahead 1% but, after the market’s close, said that operating profit in the nine months to the end of December dropped 61% compared to the same period a year ago. Shin-Etsu also forecast that annual profit for the year to the end of March 2010 would be just half the level of the previous year. The Nikkei average closed up 1.2% at 10,868 while the Topix index similarly added 1.2% to finish at 956.
5
Japanese stocks tumbled in Tokyo on Friday, taking their lead from heavy falls overnight on Wall Street after US President, Barack Obama, announced proposals to severely restrict involvement by US banks in proprietary trading. This is where a firm uses its own money to make bets on markets, often taking positions diametrically opposed to the recommendations it has given to clients. Proprietary trading has been a huge driver of profits at big investment banks but it puts capital at risk and, if things go wrong as they did in the credit crisis, taxpayer funded bail outs could be required to prevent a financial meltdown. Wall Street’s decline also impacted the US Dollar, which fell sharply on foreign exchange markets and, at one stage, was buying fewer than Y90. Technology issues quickly reversed their gains of the previous day. Shin-Etsu Chemical plunged 6% as investors reacted to its disappointing earnings projections announced after the market’s close on Thursday. Advantest also lost 3.4% while electronic components manufacturers, Kyocera and TDK, slumped 4.5% and 4.1% respectively. Automakers, too, retreated. Toyota, the world’s biggest car company, shed 3.2% and Honda slid 2.4%. Resource-related stocks were out of favour as oil hit a four-week low after US Government data showed a large build-up in gasoline inventories and a steep drop in US refining activity. Mitsubishi Corporation, Japan’s foremost trading house, fell 4.5% and rival, Mitsui & Company, was off by 2.9%. Inpex Holdings, Japan’s leading oil and gas field developer, lost 4.2%. Overall, the Nikkei average closed down 2.6% at a three-week low of 10,591. It shed 3.6% for the week, the worst performance for two months. The broader Topix index slid 1.6% to finish at 941.
