WK.1(4th – 7th January 2011)
1
Positive US manufacturing data released overnight provided a strong start to 2011 when trading resumed in Tokyo on Tuesday following the New Year holidays, with exporters showing impressive gains. Consumer electronics and entertainment giant, Sony, rose 1.6% and components manufacturer, Kyocera, added 2.7%. Among automakers, Toyota, advanced 1.4% and Nissan leapt 4.3%. Optimism over global growth prospects also drove prices for commodities such as oil and copper higher, boosting trading houses and other resource-related issues. Mitsubishi Corporation, Japan’s biggest commodities trader, jumped 4.2% while rival, Mitsui & Company, was ahead 2.5%. Inpex Holdings, Japan’s leading oil and gas explorer, climbed 4% and second-ranked Japan Petroleum Exploration surged 5.3%. Elsewhere, consumer lender, Promise, rocketed 17% on reports that Sumitomo Mitsui Financial Group (SMFG) is looking to increase its share-holding in the company. Overall, the Nikkei average closed up 1.7% at 10,398 to record its best finish since May 14, 2010. The broader Topix index was also up 1.5% to end the day at 912.
2
Japanese shares trod water in trading on Wednesday despite further encouraging data on the US economy. Exporters held firm after US factory orders registered their largest gain in eight months in November, lending support to the Dollar, which rose towards the Y83 level. But resource-related issues declined after commodity prices fell on profit-taking. Non-ferrous metals smelter, Sumitomo Metal Mining, shed 1.8%. Toshiba climbed 2.5% on news that its Westinghouse unit will work with China’s State Nuclear Power Technology Corporation on the development of a large nuclear reactor. And Yahoo Japan, the country’s largest internet services provider, tumbled 4.7% following a rating downgrade from Goldman Sachs, which expressed concern at the company’s relatively small footprint in mobile/smartphone sites at a time when increased smartphone use is threatening the PC search and portal businesses where Yahoo Japan dominates. The Nikkei average closed down 0.2% at 10,381 while the Topix index was unchanged to finish at 912.
3
The Dollar continued to strengthen on Thursday and moved above Y83 after surprisingly strong growth in US private sector employment bolstered optimism about economic recovery in Japan’s biggest export market. A report from ADP Employer Services released overnight showed that US companies created 297,000 new jobs in December, the largest ever monthly gain. On the Tokyo Stock Exchange (TSE), exporters were again in favour. Sony rose 1.3% while electronics and heavy engineering conglomerate, Hitachi, was ahead 2%, and camera and precision machinery maker, Nikon, leapt 4.4%. Electronic components manufacturers, Kyocera and TDK, added 3.1% and 3.4% respectively. Among automakers, Toyota climbed 2.6%, Honda advanced 1.3%, Mazda gained 2.5%, and Fuji Heavy Industries (FHI), which produces vehicles under the Subaru brand, jumped 4.1% following a rating upgrade from Goldman Sachs on an improved earnings outlook. Industrial robot manufacturer, Fanuc, rose 2.7%. Metal prices recovered from the previous day’s sell-off, boosting trading houses. Mitsubishi Corporation added 2.2% and Mitsui & Company climbed 2.7%. In the banking sector, Mizuho Financial, was ahead 0.7% and Resona Holdings soared 14% on mounting speculation that it will soon go ahead with its planned capital raising exercise. Japan’s No.4 bank registered in November to sell up to Y600 billion in new shares and repay government bailout funds that it received earlier, but no decision has yet been made on timing and other details. Elsewhere, Nippon Sharyo, which builds carriages for high-speed trains and other rolling stock, surged 14.9% on news that it has won part of a rail order in Taiwan worth some US$360M. However, Fast Retailing slumped 5.1% after announcing that same-store sales at its Uniqlo casual clothing chain dropped 15.5% in December, the fifth straight month of year-on-year declines. Overall, the Nikkei average closed up 1.4% at a fresh eight-month high of 10,530. The more comprehensive Topix index also rose 1.4% to finish at 925.
4
Japanese share prices struggled to maintain their momentum in trading in Tokyo on Friday but refused to give ground either. Automakers remained in favour. Toyota climbed 2.2% and Nissan jumped 4.4%. Trading houses and other resource-related issues, however, were lower. Exploration and development firm, Inpex Holdings, shed 1.7% while Mitsubishi Corporation slid 1% and Mitsui & Company slipped 0.7%. Engineering contractor, Chiyoda Corporation, tumbled 8.6% on news that it has lost out to rival, JGC Corporation and Korea’s Hyundai Heavy Industries on a project to develop the Barzan gas field in Qatar. JGC rose 1.6%. Overall, the Nikkei average closed up just 0.1% at 10,541 but it was enough to register another eight-month high and a 3.1% gain on the week. The broader Topix index was ahead 0.2% to finish at 926.
