WK.50(12th - 16th December 2011)
1
The week started positively in trading in Tokyo on Monday after European Union (EU) leaders agreed tougher fiscal rules at their summit late last week, despite doubts that the measures are sufficient to address and tackle the region’s debt problems. Indeed, there remains considerable nervousness that a proposed new draft treaty on deeper economic integration with automatic sanctions for budget busters could take months to negotiate and may face difficult referendums in several countries. Investors will be keeping a close eye on upcoming bond auctions by European countries as well as on US economic indicators to be released later this week for clues to the outlook for the global economy. Consumer electronics giant, Panasonic, rose 1.7% on news that it plans to start marketing its smart-phones worldwide and will begin selling the first model in Europe from March. And Olympus surged 7.8% as the scandal-hit camera and medical instruments manufacturer said it was preparing this week to file its re-stated results for the six months through to the end of September, a necessary step to avoid a potential de-listing. Among automakers, however, Toyota slipped 0.7% after cutting its full-year profits forecast by more than half to just Y180 billion because of the impact of the strong Yen, supply disruptions caused by the March 11 earthquake and tsunami, and the recent flooding in Thailand. Shipping companies gained as cargo rates for large vessels hit a high for the year. Nippon Yusen, Japan’s biggest shipper by sales, jumped 4.3%, Mitsui OSK Lines leapt 6.4%, and Kawasaki Kisen climbed 3.6%. Elsewhere, trading house, Sojitz, slid 1.6% on saying that it will likely post a net loss of Y12 billion for the year to the end of March 2012 compared to a profit of Y16 billion in the previous year. Overall, the Nikkei average closed up 1.4% at 8,654. The broader Topix index was ahead 1.2% to finish at 747. Trading volume was relatively thin with just over 1.5 billion shares exchanging hands.
2
Japanese share prices fell in trading in Tokyo on Tuesday as investor sentiment soured following negative assessments released overnight by US rating agencies on the outcome of last week’s European Union (EU) summit. Moody’s Investors Services, citing the lack of effective measures put forward to stem the on-going financial crisis in the Euro-zone, warned of possible downgrades to the sovereign debt ratings of all EU member countries, while Fitch Ratings said that the summit did “little to ease the pressure on Euro-zone sovereign debt.” Financials were sold. Mitsubishi UFJ, Japan’s largest bank, shed 2.9% and Nomura Holdings, the country’s biggest securities brokerage, tumbled 4%. Tech stocks were also under pressure after US chip giant, Intel, lowered its fourth-quarter revenues and earnings forecasts because of a shortage of hard disk drives caused by the recent devastating floods in Thailand. Tokyo Electron, a world-leading manufacturer of test and production equipment for the semiconductor industry, slid 1.3% and Renesas Electronics slumped 3%. Elpida Memory, however, bucked the trend and rose 2.9% on bargain-hunting after a recent sharp sell-off. The flooding in Thailand also took its toll on automakers following Toyota’s halving of its annual profits forecast the previous day. Honda, which is reputed to be among the worst-hit by the disaster, dropped 2.9%. Elsewhere, scandal-mired Olympus surged another 5.4% on reports that auditors are set to approve revised financial statements for the past five years, bolstering the chances that the company will avoid a potential de-listing when it re-files its interim results on Wednesday. And discount home electronics retailer, Yamada Denki, lost 2% on news that its sales in November plunged 58% from the same month a year ago. The Nikkei average closed down 1.2% at 8,553 while the Topix index was off by 0.8% to finish at 741. Trading volume was again fairly light with around 1.65 billion shares exchanging hands.
3
Stocks declined again in trading in Tokyo on Wednesday as concerns over Europe saw the Euro fall on foreign exchange markets towards the Y101 level, pressuring exporters. Consumer electronics and entertainment giant, Sony, slid 1.5% and liquid crystal display (LCD) specialist, Sharp, shed 2.9%. Fujitsu, however, rose 1% on reports that it plans to introduce a new system in 2012 to boost the capacity of communications networks to handle increased demand amid the ever-growing popularity of smart-phones. Nippon Steel was flat despite successfully winning approval from Japanese competition authorities for its proposed Y685 billion takeover of Sumitomo Metal Industries (SMI). The merged company would be the world’s second-biggest steel group. SMI advanced 0.7%. Elsewhere, on-line game developer, Nexon, debuted on the Tokyo Stock Exchange in the biggest initial public offering (IPO) of the year but its performance was lackluster with the share price slipping below the IPO price by the market’s close. Rivals were also dragged lower, with DeNa dropping 4.3% and Gree slumping 2.7%. Olympus, too, tumbled 4.1% following release of its long-delayed results for the six months to the end of September, which showed a net loss of Y32 billion for the period, and also the re-stating of its accounts for the past five years. These were better that some investors had feared and revealed that at no point did the true financial position of the company sink into technical insolvency, where liabilities exceeded assets. Overall, the Nikkei average closed down 0.4% at 8,519. The more comprehensive Topix index slipped 0.5% to finish at 737. Trading volume was again thin with just over 1.5 billion shares exchanging hands.
4
Japanese share prices continued to fall in trading in Tokyo on Thursday following sell-offs overnight on overseas markets and sharp declines in commodity prices amid persistent concerns that the worsening debt crisis in the Euro-zone will keep weighing on global economic growth. The Bank of Japan’s (BoJ’s) latest Tankan survey of business confidence, which was released shortly before the market opened, also provided little cheer. Sentiment among large manufacturers has become more pessimistic over the past three months because of the strong Yen, disruptions from the flooding in Thailand, and uncertainty arising from the financial crisis in Europe. Shipping companies slumped on fears of slowing global demand. Nippon Yusen dropped 4.6%, Mitsui OSK Lines tumbled 5.5%, and Kawasaki Kisen sank 4.8%. Construction equipment manufacturer, Komatsu, also shed 4.2%. Among resource-related issues, oil refiner and distributor, JX Holdings, slid 2.9% and trading house, Mitsui & Company lost 3.3%. Disgraced camera and medical instruments maker, Olympus, plummeted 20.8% after its balance sheet was dented by finally reflecting the impact of US$1.1 billion in past investment losses covered up by an accounting fraud perpetuated over the past 13 years. Investors fear the company will now be forced to raise fresh capital to repair its finances. Elsewhere, on-line game developer, Nexon, which had a disappointing stock market debut the previous day, slipped a further 2.1% while video game developer, Square Enix Holdings, also declined 1% on news that personal data on users may have been leaked through unauthorized access to the company’s members-only website. But East Japan Railways climbed 1.2% on reports that demand for seats on Shinkansen ahead of the New Year holidays is strong, indicating that the bullet trains will be at full capacity. The Nikkei average closed down 1.7% at 8,377 and the Topix index shed 1.6% to finish at 725. Trading volume increased slightly with almost 1.55 billion shares exchanging hands.
5
Stocks snapped a three-day losing streak and rose in trading in Tokyo on Friday following some positive signals from US economic indicators released overnight. But worries over the financial crisis in Europe continued to weigh on the market and limited gains. Investors were cautious ahead of a vote in the Italian parliament scheduled for later in the day to expedite approval of a €33 billion austerity package, while fears of possible downgrades to the sovereign debt ratings of Euro-zone countries remained. The Euro itself weakened slightly and struggled to hold above the Y101 level. Exporters and automakers, in particular, were sold. Toyota slid 1.9% and Mazda slipped 1.5%. On-line gaming firm, Nexon, fell for the third straight day and plunged another 11.6%, raising questions about whether its US$1.2 billion initial public offering (IPO) on Wednesday was mis-priced. In contrast, rival social gaming and internet services companies were bought after Nomura Holdings re-started coverage of the sector with a bullish rating, citing factors such as the increased use of smart-phones. Gree advanced 0.5%, Cyber Agent added 4.2%, and DeNa jumped 5.2%. FujiFilm Holdings shed 1.3% on news that it is planning to purchase US-based medical equipment manufacturer, SonoSite, in a deal worth approximately US$753M, and Olympus also slumped 3.6% after a senior company executive admitted that, as a result of the accounting fraud and cover up of past investment losses at the camera and medial instruments maker, there may have been times when the company paid dividends when it had no distributable profits. Elsewhere, Fast Retailing, operator of the Uniqlo chain of casual clothing stores, climbed 3.3% on expectations of increased sales of winter wear as the weather turns colder. Overall, the Nikkei average closed up 0.3% at 8,402 but still registered a loss of 2% for the week. The broader Topix index eased 0.2% to finish at 724. Trading volume was light with fewer than 1.5 billion shares exchanging hands.
