WK.3(17th – 21st January 2011)
1
A sell-off in Shanghai following the decision by China’s central bank to raise reserve requirements over the weekend in its latest attempt to rein in inflation weighed on Japanese stocks in trading in Tokyo on Monday. Firms with significant exposure to the Chinese market were singled out. Komatsu, the world’s second-biggest manufacturer of earth-moving equipment after Caterpillar of the US and a major exporter to China’s construction and mining industries, slid 1% while rival, Hitachi Construction Machinery, shed 1.3%. Banks also came under pressure as investors took profits after their recent strong run. Mizuho Financial slipped 0.6%. In contrast, resource and energy related issues gained on higher oil and commodity prices. Non-ferrous metals smelter, Dowa Holdings, advanced 1.3%. In the high tech sector, chipmaker, Elpida Memory, rose 2.5% on a rating upgrade from Deutsche Bank and a slightly weaker Yen, which saw the US Dollar holding on to the Y83 level. Overall, the Nikkei average closed up marginally at 10,503 but the broader Topix index declined 0.2% to finish at 929.
2
Apple’s announcement overnight that its CEO, Steve Jobs, would take medical leave for the third time since 2004 cast a shadow over global stock markets on Tuesday as traders worried about the reaction from Wall Street, which was closed Monday for the Martin Luther King Day public holiday. Mr Jobs, who has suffered from pancreatic cancer and underwent a liver transplant two years ago, is widely regarded as the creative genius behind the success of the company and any suggestion that he could be forced by ill health to step aside is certain to have a negative impact. Complicating matters further, Apple was also scheduled to release its latest earnings report later in the day. In Tokyo, investors locked in profits on high tech companies that are major component suppliers to Apple’s iPad and iPhone, and which have recently been out-performing the wider market. Murata Manufacturing, the world’s leading maker of ceramic capacitors used in smartphones, eased 0.2% while Kimoto, which manufactures hard coat films for touch panels, fell 2.1% and Foster Electric, a supplier of headphones for smartphones, slid 1.4%. However, Elpida Memory climbed 1.1% on reports that it is planning to raise chip prices by up to 10% as early as this month. Steel producers came under pressure after Nippon Steel revised downwards its profit forecast for the year to the end of March 2011 by Y30 billion to Y220 billion because of increased costs for raw materials. Nippon Steel and rival, JFE Holdings, both shed 1.4%. However, trading houses, which are beneficiaries of higher commodity prices, gained. Mitsubishi Corporation advanced 1.1%. Property-related issues were also in favour after Nomura Securities raised its rating on the sector. Mitsui Fudosan, Japan largest real estate developer, added 1.5% and Mitsubishi Estate jumped 3.4%. The Nikkei average closed up 0.2% at 10,519 while the Topix index was ahead 0.3% to finish at 932.
3
Japanese share prices rose for a third day in trading in Tokyo on Wednesday, inching their way back towards the eight-month highs reached the previous week. Textiles were in focus after Goldman Sachs upgraded its rating on the sector, citing attractive valuations. Toray Industries, Japan’s largest maker of synthetic fibres, added 4.7% and Teijin leapt 6.6%. Non-ferrous metals smelters were also in favour as copper prices again flirted with record highs on Dollar weakness. Sumitomo Metal Mining gained 4.9% and Dowa Holdings jumped 5.2%. Elsewhere, social network and gaming company, Gree, climbed 3.4% on announcing that it would enter the smartphone ad network business, connecting advertisers with websites wanting to run advertisements. Overall, the Nikkei average closed up 0.4% at 10,557. The more comprehensive Topix index was ahead 0.6% to finish at 937.
4
News that China’s economy grew at a faster than expected 9.8% annual pace in the three months to the end of December heightened fears that the Bank of China will hike interest rates again and prompted investors to take profits in trading in Tokyo on Thursday. Sentiment was also soured by US stocks suffering their biggest fall in nearly two months overnight after Goldman Sachs posted a 53% drop in quarterly earnings on declining revenues. Mitsubishi UFJ, Japan’s largest bank by assets, slipped 1.1% and Sumitomo Mitsui Financial Group (SMFG) shed 1.6%. Technology issues were also under pressure following poor results overnight from Cree and other US LED lighting manufacturers. Chipmaker, Elpida Memory, tumbled 3.9% and Tokyo Electron, a leading manufacturer of test and production equipment for the semiconductor industry, slumped 3.8%. Printer/copier and digital camera manufacturer, Canon, also slid 2.3%. Among automakers, Nissan lost 1.7% but Daihatsu Motor, the mini-vehicle arm of Toyota, bucked the trend and rose 1.4% on reports that it plans to boost output capacity at its Indonesian factory by 50,000 units to 330,000 vehicles per year. The Nikkei average closed down 1.1% at 10,437 while the Topix index was off by 1% to finish at 927.
5
Prices for oil, copper, gold and other commodities all fell in trading in Tokyo on Friday as investors became increasingly worried that an overheating economy and rising inflation in China will force the government to tighten monetary policy in an effort to cool things down. Energy and resource-related stocks dropped sharply. Inpex Holdings, Japan’s leading oil and gas exploration firm, slid 3.2%, Sumitomo Metal Mining tumbled 5.4% and, among trading houses, Mitsubishi Corporation slumped 4.5% and Mitsui & Company shed 3.3%. In contrast, defensive issues were in favour. Tokyo Electric Power (TEPCO), Japan’s biggest utility, advanced 1.4%. In other sectors, NEC Corporation, Japan’s largest manufacturer of personal computers, climbed 2.1% on reports that it is in talks with China’s Lenovo about a joint-venture in PCs. But GS Yuasa, Japan’s top car battery maker, declined 4% on news that Mitsubishi Motors will use lithium-ion batteries from Toshiba in an electric vehicle to be launched in the autumn. Overall, the Nikkei average closed down 1.6% at 10,275 and also lost 2.1% for the week, its worst performance for three months. The broader Topix index similarly finished 1.8% lower at 911. Trading volume was heavy with 2.7 billion shares changing hands.
