WK.29(19th - 22nd July 2011)
1
The Tokyo Stock Exchange (TSE) was closed Monday for a national holiday (Maritime Day) but the mood was sombre when trading resumed on Tuesday as investors fretted about the seeming inability of governments in Europe and the US to get to grips with their respective debt crises. Euro-zone leaders are scheduled to meet on Thursday to try and finalize a second bail-out for Greece of up to €110 billion while, in Washington, US political leaders remain deadlocked over negotiations to raise the federal borrowing limit despite the imminent prospect of the government running out of money in two weeks and being unable to pay its bills. Banks were sold. Mitsubishi UFJ, Japan’s top lender, shed 2.5%, Mizuho Financial slid 2.3%, and Sumitomo Mitsui Financial Group (SMFG) slipped 1.3%. Exporters were under pressure from the strong Yen, which hovered around Y79 against the Dollar and Y112 against the Euro. Consumer electronics and entertainment giant, Sony, fell 2.5% and printer/copier and digital camera manufacturer, Canon, which derives more than 75% of its revenues from overseas sales, dropped 2.8%. Nintendo, maker of the Wii and DS video games consoles, also slumped 2.7% following a rating downgrade from Macquarie Securities, which cited struggling sales of the company’s new 3D-capable hand-held device. Among auto companies, Honda was off by 2%. Domestic-focused issues, however, held up far better. Telecommunications giant, NTT, added 1.7% while Seven & I Holdings, Japan’s largest retailer, advanced 1.4%. Internet media business, Gree, rose 1.2% and on-line advertising company, Cyber Agent, was ahead 0.5%. Elsewhere, however, Kansai Electric Power tumbled 3.3% after it was forced to shut-down one of its nuclear reactors because of a malfunction, exacerbating the nationwide shortage of electricity generating capacity. As with the many other nuclear plants currently off-line around the country, the difficulty now will be getting approval from the authorities to re-start operations. Overall, the Nikkei average closed down 0.9% at 9,890. The broader Topix index declined 0.7% to finish at 854. Trading volume was slim with just 1.5 billion shares exchanging hands.
2
Better than expected quarterly results released overnight on Wall Street by Apple and IBM boosted technology stocks in trading in Tokyo on Wednesday. Investors were also encouraged by a sharp rise in US housing starts, which bolstered optimism about the wider economy, and by signs of progress in negotiations to lift the US debt ceiling. Electronic components manufacturer, TDK, jumped 3.1% and consumer electronics maker, Pioneer, added 1.8%. Toshiba, a major manufacturer of NAND flash memory, climbed 2.7%. Advantest, a world-leading maker of test equipment for the semiconductor industry, advanced 1.4% while camera and precision equipment manufacturer, Nikon, leapt 3.5%. Softbank, Japan’s third-ranked mobile phone network operator, gained 2.6% and Foster Electric, which makes headsets for smartphones, was ahead 1.7%. Industrial robot manufacturer, Fanuc, surged 3.9% and automaker, Honda, rose 1.3%. In other sectors, banks rebounded from their losses of the previous day. Mitsubishi UFJ added 1.6% and Sumitomo Mitsui Financial Group (SMFG) advanced 1.1%. Resource-related issues also climbed on higher oil prices. Inpex Holdings, Japan’s biggest oil and gas field developer, gained 1.9% and rival, Japan Petroleum Exploration (JAPEX), was ahead 1.2%. The Nikkei average recovered the 10,000 level and closed up 1.2% at 10,006 while the Topix index rose 0.8% to finish at 861.
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Stocks held on to the previous day’s gains in trading in Tokyo on Thursday. Reports that German Chancellor, Angela Merkel, and French President, Nicholas Sarkozy, had reached agreement overnight on a new bail-out plan for Greece that will include participation by the banking sector helped improve investor confidence as did reports that US President, Barack Obama, has indicated that he would now support a short-term increase in the US borrowing limit as part of a broader deficit reduction deal in an attempt to break the deadlocked negotiations on raising the US debt ceiling. The Euro strengthened on foreign exchange markets, nudging Y113 against the Yen, but the Dollar remained weak, buying fewer that Y79. On the Tokyo Stock Exchange (TSE), exporters and technology issues, in particular, were generally lower following disappointing forecasts overnight from Intel and Seagate Technology of the US. Sony slid 0.8% while Nidec, the world’s biggest manufacturer of small motors for hard disk drives (HDDs), fell 1.8% and TDK, a maker of HDD heads and other electronic components, dropped 2.2%. In the automotive sector, Toyota slipped 0.5% but the focus was mainly on parts manufacturers after it became known that Japan’s Fair Trade Commission is investigating seven major auto-parts makers on suspicion that they have been operating a price-fixing cartel. Mitsuba plunged 8% and Calsonic Kansei slumped 2.4%. Banks, however, rose for a second day with Mitsubishi UFJ adding another 1.3% and Sumitomo Mitsui Financial Group (SMFG) advancing 0.5%. Elsewhere, paper manufacturers were out of favour in the wake of disappointing export figures for June. Nippon Paper shed 2.2% and Oji Paper declined 2%. Meat packers also lost ground on reports that more than 1,000 beef cattle that ingested feed contaminated with radioactive caesium have been shipped all over Japan from Fukushima and neighbouring prefectures. Itoham Foods was off by 2.2%. Overall, the Nikkei average was marginally higher and closed at 10,010. The more comprehensive Topix index, however, eased 0.1% to finish at 860.
4
Share prices rose again in trading in Tokyo on Friday after leaders of the Euro-zone countries agreed on a second bail-out for Greece in an emergency summit held overnight. Canon, which is reliant on the European market for about a third of its revenues, advanced 1.3% and Nikon, which also has significant European sales, gained 1.4%. Electronics and electrical machinery conglomerate, Toshiba, added 2% while optical devices and components manufacturer, Tamron, leapt 7% on lifting its net profits forecast for the year and receiving a ratings upgrade from Nomura Securities. Banks were again higher after Morgan Stanley posted surprisingly strong results on Wall Street overnight. Mitsubishi UFJ climbed another 3.3%. Elsewhere, Komatsu, the world’s second-largest maker of earth-moving equipment and construction machinery after Caterpillar of the US, was ahead 1.4%. The Nikkei average closed up 1.2% at 10,132 and registered both a two-week high and a gain of 1.6% for the week. The broader Topix index rose 1% to finish at 869. Trading volume was moderate with about 1.8 billion shares exchanging hands.
