WK.35(5th - 9th September 2011)
1
Stocks fell sharply in trading in Tokyo on Monday in response to US non-farm payrolls data released late Friday that showed no net gain in jobs for August, heightening fears that the world’s biggest economy and Japan’s most important trading partner could be about to slip back into recession. Europe’s problems also weighed on the market, pushing the Euro down to the Y108 level against the Yen. Exporters were sold. Printer/copier and digital camera manufacturer, Canon, shed 2.5% while, among automakers, Toyota dropped 2.6% and Honda tumbled 4.7%. Financials were also under pressure after Nomura Holdings, Japan’s largest securities brokerage, became one of 17 institutions named in a lawsuit brought by the US Federal Housing Finance Agency over sales of mortgage-backed securities. Nomura slumped 4.6% and Mitsubishi UFJ, Japan’s largest bank, slid 2.3%. Elsewhere, construction firms performed well following a deadly typhoon that caused destruction across wide areas of western Japan over the weekend. Investors are speculating that they will benefit from rebuilding demand. Obayashi climbed 1.9% and Maeda Construction added 3.5%. Overall, the Nikkei average closed down 1.9% at 8,784. The broader Topix index was off by 1.8% to finish at 756. Trading volume was low with fewer than 1.6 billion shares exchanging hands.
2
The worsening financial woes in the Euro-zone pummeled European stocks in overnight trading and sent shares sharply lower in Tokyo when the markets opened on Tuesday morning. Investors are particularly concerned about the solvency of European banks, which hold substantial quantities of bonds issued by governments of Euro-zone nations with the biggest problems funding their sovereign debts. Already talks between Greece and international lenders on continuing financial aid appear to have broken down and Italy faces a general strike over austerity plans designed to bring the country’s finances back onto a sustainable course. Any default or deep “haircut” for bondholders could easily trigger a second full-blown banking crisis. Japanese banks were sold on uncertainty about counter-party risk. Mitsubishi UFJ fell 2.7%, Mizuho Financial shed 1.8%, and Sumitomo Mitsui Financial Group (SMFG) dropped 3.4%. Nomura Holdings tumbled another 5.5% as investors continued to react to it being one of the 17 financial institutions named the previous day in a US lawsuit brought over the mis-selling of mortgage-backed securities. Exporters were also under pressure on worries that Europe’s problems will lead to a further slowdown in the global economy. Automaker, Toyota, slipped 1.3% and consumer electronics and entertainment giant, Sony, slid 2.4%. Electronics and electrical machinery conglomerate, Toshiba, slumped 5.1% on reports that it is in talks to increase its stake in nuclear power plant engineering firm, Westinghouse, by buying out the 20% owned by Shaw Group of the US. The worry, however, is that Toshiba may have to resort to equity-financing in order to pull off the deal. Elsewhere, however, utilities rose after new Industry Minister, Yoshio Hachiro, was quoted as saying that he is in favour of resuming operations at idled nuclear reactors in Japan as soon as possible. Kansai Electric Power climbed 3.5%, Shikoku Electric Power jumped 4.4%, and Hokuriku Electric Power also added 3.5%. The Nikkei average closed down 2.2% at 8,591 to finish at its lowest level since April 2009. The Topix index lost 1.9% to end at 741. Trading volume increased with more than 2.1 billion shares exchanging hands.
3
Speculation that the Bank of Japan (BoJ) might follow the lead of the Swiss National Bank and take action to weaken its currency helped stocks to rebound in trading in Tokyo on Wednesday and recover most of the losses from the previous day’s session. As it happened, later in the day, the BoJ decided at its monthly policy-setting meeting to hold off on any additional monetary easing measures but, by then, the Yen had already weakened and the US Dollar had risen above the Y77 level. Exporters gained. Sony added 3.2% and Canon advanced 1.5%. Elpida Memory, the world’s third-biggest manufacturer of dynamic random access memory (DRAM) chips, surged 7.5% on news that it is suing Taiwanese rival, Nanya Technology, in the US over alleged violations of four patents. Among automakers, Toyota was ahead 2.9% and Honda, which generates more than 80% of its revenues from overseas sales, climbed 1.6%. Shipping companies also performed well following a favorable report from Credit Suisse, which cited an improved outlook for earnings. Nippon Yusen, Japan’s largest shipper, rose 2.3% while Mitsui OSK Lines jumped 4% and Kawasaki Kisen added 3.3%. In other sectors, Mitsui Fudosan, Japan’s leading real estate firm, leapt 4.7% after announcing a large-scale redevelopment project in Tokyo’s Nihonbashi district in collaboration with department store chain, Takashimaya, and Sumitomo Realty & Development. Beverage giant, Kirin Holdings advanced 3.2% on reports that it has found a lactic acid bacterium that invigorates immune cells and is safe for use in yoghurt and cheese products. The company plans to develop nutrition supplements and health drinks based on the bacterium. And mobile social gaming operators, Gree and DeNa, soared 13.2% and 8% respectively following a rating upgrade on the sector from Mitsubishi UFJ Morgan Stanley Securities, which estimates that the market in Japan will be worth some Y400 billion by 2013. Overall, the Nikkei average closed up 2% at 8,763 while the more comprehensive Topix index was ahead 1.7% to finish at 754. Trading volume was moderate with around 1.76 billion shares exchanging hands.
4
Japanese shares edged higher in trading in Tokyo on Thursday despite Government data showing that core machinery orders, a leading indicator of corporate capital investment, fell 8.2% in July from the previous month, twice the pace of decline expected by analysts. Industrial robot manufacturer, Fanuc, slumped 3.4% and Komatsu, the world’s second-biggest maker of earth-moving equipment after Caterpillar of the US, also slid 1.9%. In contrast, however, semiconductor-related stocks preformed well on renewed optimism after a surprise improvement in the closely-watched Philadelphia Semiconductor index. Advantest, the world’s largest manufacturer of memory chip testers advanced 0.8% and rival, Tokyo Electron, another leading maker of chip test and production equipment, added 3%. And Sumco, the world’s No.2 manufacturer of silicon wafers for the semiconductor industry, climbed 2.6% following a rating upgrade from Credit Suisse. Commodity and resource-related issues were also in favour after the price of benchmark WTI oil increased more than US$3 to a five-week high of over US$90 per barrel. Inpex Corporation, Japan’s largest oil and gas field developer, jumped 4.5% and rival, Japan Petroleum Exploration (JAPEX), gained 3.3%. The Nikkei average closed up 0.3% at 8,793 while the Topix index was ahead 0.5% to finish at 757. Trading volume was thin with fewer than 1.5 billion shares exchanging hands.
5
US President, Barack Obama, failed to excite overnight when unveiling his latest plans to boost the economy in a heavily-hyped speech. He proposed a US$447 billion jobs package and challenged Congress to pass legislation providing tax cuts for workers and businesses, but such measures were in line with expectations and left many investors disappointed. In Tokyo, stocks opened lower in trading on Friday. Fanuc tumbled 7.6% after UBS Securities cut its outlook for the company on weak machine tools data, and Nippon Steel shed 2.2% on news that Brazilian steel maker, CSN, intends to buy an additional 26% of its rival, Usiminas, in a move that would displace Nippon Steel as Usiminas’s largest shareholder. However, there were better performances elsewhere. Nikon climbed 2.6% on reports that it is entering the market for lightweight, interchangeable lens, digital cameras and expects to release its first product with a mirror-less design later this year. And Fast Retailing added 1.8% following its announcement of plans to open more than 100 new outlets of its Uniqlo casual clothing stores in Asia by August 2012. Overall, the Nikkei average closed down 0.6% at 8,738 to register a 2.4% fall for the week. The broader Topix index slipped 0.2% to finish at 756. Trading volume was relatively heavy with more than 2.2 billion shares exchanging hands.
