WK.19(9th - 13th May 2011)
1
Japanese share prices failed to benefit from a robust US payrolls report for April released over the weekend when trading resumed in Tokyo on Monday. The report showed that the US economy added 244,000 jobs last month, the most in nearly a year, in a sign that the recovery is finally feeding through to create more employment. But Tokyo stocks were dragged down by utility companies, which were sold heavily after Japanese Prime Minister, Naoto Kan, called on Chubu Electric Power to suspend operations at its Hamaoka nuclear power plant, located about 120 miles (200 km) south-west of Tokyo, over fears that it is vulnerable to another large earthquake that is predicted to strike the Tokai region of Japan in the near future. Investors are worried that such action could further exacerbate power shortages that have already caused widespread disruption to operations at manufacturing facilities since the Great East Japan Earthquake on March 11 crippled Tokyo Electric Power’s (TEPCO’s) Fukushima Daiichi nuclear power plant and prompted the world’s worst nuclear crisis for 25 years, which is still on-going. Chubu Electric Power, Japan’s third-biggest power company, plunged 10.3% and the electric power and gas sub-index as a whole lost 2.3%. Elsewhere, however, there were some bright spots. Consumer electronics and entertainment giant, Sony, rose 2.1% on bargain-hunting following its recent sharp falls in response to the theft of personal data relating to its PlayStation gaming network. Chip maker, Elpida Memory, also climbed 4%. But Fast Retailing, owner and operator of the Uniqlo casual clothing chain, dropped 4.2% after announcing weaker-than-expected same-store sales in April compared to the same month a year ago. Overall, the Nikkei average closed down 0.7% at 9,794. The broader Topix index slipped 0.4% to finish at 853. Trading volume was light with just 1.7 billion shares exchanging hands.
2
Share prices edged higher in trading in Tokyo on Tuesday on hopes that the disruption faced by Japanese manufacturers after the devastating earthquake and tsunami on March 11 might not be quite as severe as first feared. Toyota rose 1.7% on reports that the automaker’s output could return to normal by November, sooner than expected. Electronics and electrical machinery conglomerate, Toshiba, jumped 3.7% after it announced that it had returned to the black for the financial year just ended, booking a net profit of Y138 billion against a Y20 billion loss in the previous year. Revenues were up 1.7% to Y6,400 billion. Toshiba also said that it expects operating profits to increase 25% in the current financial year through to the end of March 2012. Sumitomo Heavy Industries (SHI) rocketed 11.8% following a rating upgrade from Goldman Sachs after the company forecast an 18% rise in annual operating profits to Y54 billion. And Chubu Electric Power recovered some of its heavy losses from the previous day and gained 1.9%. The Nikkei average closed up 0.3% at 9,819 while the Topix index advanced 0.4% to finish at 856.
3
Stocks rose again in Tokyo on Wednesday. NEC Corporation jumped 4.7% after it forecast a 56% increase in operating profits to Y90 billion for the current financial year, comfortably beating analysts’ predictions. And leasing giant, Orix Corporation gained 4% on saying that it expects net profits to grow 15% to Y78 billion this year. Commodity-related issues outperformed on higher prices for oil and gold. Inpex Corporation, Japan’s leading oil and gas field developer, advanced 1% and rival, Japan Petroleum Exploration (JAPEX), added 1.7%. Elsewhere, truck manufacturer, Isuzu Motors, climbed 4.3% on news that it is considering an operational tie-up with Volkswagen for engines. And Tokyo Electric Power (TEPCO) rebounded 8.4% on hopes that rumoured government assistance will help it deal with compensation claims relating to the nuclear crisis at its Fukushima power plant and lift some of the uncertainty over the future of the company. Overall, the Nikkei average closed up 0.5% at 9,864. The more comprehensive Topix index was ahead just 0.1% to finish at 858.
4
A sharp sell-off overnight in commodities put stocks under pressure in trading in Tokyo on Thursday. Gold, silver and crude oil prices all sank after figures showed a greater than expected easing of the pace of growth in China’s industrial output. Mitsubishi Corporation, Japan’s biggest commodities trader, fell 2% while Sumitomo Metal Mining dropped 3.1% and Toho Zinc plunged 9.5%. Inpex Corporation tumbled 3.6% and oil refiner and distributor, JX Holdings, slumped 2.5%. In other sectors, however, Toyota jumped 3.1% despite reporting that profits dived 75% to just Y25.4 billion in the three months to the end of March compared to the same period a year ago after the March 11 earthquake and tsunami wiped out parts suppliers in north-east Japan and severely disrupted car production. However, full year earnings doubled, and Toyota also said that it expects output to recover two months earlier than previously estimated as parts suppliers are apparently making good progress in bringing their production back on line. Nonetheless, Toyota, gave no forecast for the current financial year because of the uncertain outlook, although it promised to provide an earnings projection by mid-June. The company is expected to lose its spot as the world’s top-selling automaker this year to General Motors of the US. Heavy machinery and electronics conglomerate, Hitachi, added 2.4% on reporting a fourfold increase in profits for the January – March quarter thanks to cost-cutting and improved demand for computer components and construction machinery. But, like Toyota, it declined to make any forecast for the current year, citing uncertainties following the March 11 earthquake and tsunami. Elsewhere, Tokyo Electric Power (TEPCO) failed to hold on to its gains from the previous day and plummeted 8.8% due to renewed concerns about the problems at its Fukushima nuclear plant, where engineering teams are still struggling to stabilize the situation and find a permanent solution to cooling the damaged reactors. The Nikkei average closed down 1.5% at 9,717 while the Topix index slid 1% to finish at 849. Trading volume was moderate with 2 billion shares exchanging hands.
5
Stocks fell further in trading in Tokyo on Friday as investors took fright at government plans that seem to violate the rights of private firms. Bank shares tumbled after Chief Cabinet Secretary, Yukio Edano, said he expected financial institutions to be asked to cooperate in easing the loan burden on Tokyo Electric Power (TEPCO). Utilities were similarly under pressure following approval of a plan to help TEPCO compensate victims of the crisis at its stricken Fukushima nuclear power plant that includes contributions from other power companies. Sumitomo Mitsui Banking Corporation (SMBC), TEPCO’s main creditor bank, dropped 3.8% and Mitsubishi UFJ, Japan’s top lender, shed 2.8%. Among utilities, Tohoku Electric Power plunged 6.9% and Kansai Electric Power slumped 3.1%. In other sectors, precision equipment and digital camera manufacturer, Nikon, leapt 6.5% after it forecast that net profits will increase 54% to Y42 billion in the current financial year thanks to robust demand for its products and expansion into fast-growing markets. Nissan Motor climbed 3.5% on posting strong results for the financial year just ended and saying that its global output, which has been curtailed by the impact and aftermath of the March 11 earthquake and tsunami, should be back to normal by October. Nissan sold 4,185,000 vehicles in the 12 months through to the end of March 2011, some 19% more than in the previous year, and reported a sevenfold increase in profits to Y319 billion on revenues up 17% to Y8,770 billion. Elsewhere, however, commodity-related issues extended their decline from the previous day. Inpex Holdings dropped 3.9%, JX Holdings slid 1.7%, and Sumitomo Metal Mining fell 3.1%. Overall, the Nikkei average closed down 0.7% at 9,649 and lost 2.1% for the week. The broader Topix index shed 1.1% to finish at 840. Trading volume was heavy with 2.83 billion shares exchanging hands.
