WK.04(23rd - 27th January 2012)
1
With markets in China, Hong Kong, Singapore, Indonesia, Malaysia, South Korea and Taiwan all closed for the lunar New Year holidays, Tokyo was one of the few in the region trading on Monday, and it lacked real direction. Investors were encouraged by US stocks on Wall Street hitting a six-month high on Friday but remained cautious about Greece following the break-down of negotiations with private creditor banks over the weekend. It will now be up to a meeting of Euro-zone finance ministers scheduled for later on Monday to decide what terms they are ready to accept for a Greek debt restructuring as part of a second bail-out package for Athens. Banks were among the better performers with Mitsubishi UFJ, Japan’s top lender, Mizuho Financial, and Sumitomo Mitsui Financial Group (SMFG) all gaining. Nomura Securities, Japan’s largest securities brokerage, also advanced 1.8%. Exporters, too, were mixed to higher. Electronics and electrical machinery conglomerate, Toshiba, jumped 4.3% while camera and medical instruments maker, Olympus, which is struggling to overcome an accounting scandal involving the cover-up of some US$1.8 billion in investment losses over several years, surged 8.2% on reports that it is near to finalising a business tie-up with Sony. The consumer electronics and entertainment giant also added 4%. Rival, Panasonic, however, slid 1.4% following a rating downgrade from Deutsche Bank, citing the impact of the strong Yen. On Friday, Moody’s Investor Services downgraded Panasonic’s debt rating and said that its finances had deteriorated since it bought out its two major consolidated subsidiaries, Sanyo Electric and Panasonic Electric Works, last April. Elsewhere, on-line game firm, DeNA, soared 8.6% on news that a game based on a popular cartoon and recently launched on its social network is proving a big hit. Overall, the Nikkei average was virtually unchanged from Friday and closed at 8,766. The broader Topix index edged up 0.2% to finish at 757. Trading volume was moderate with just over 2 billion shares exchanging hands.
2
Stocks nudged higher in trading in Tokyo on Tuesday as the Yen weakened and the Euro held above the Y100 level on foreign exchange markets. A brighter outlook for the US economy also helped to improve sentiment. Automakers rose. Toyota added 2.7%, Nissan was ahead 0.6%, Mazda Motor advanced 0.8%, and Mitsubishi Motor gained 1.1%. Truck manufacturer, Hino Motors, was also up 1% while Suzuki Motor climbed 2.4% on optimism about the prospects for its Indian joint venture, Maruti Suzuki, following a tough year in 2011. Shippers also performed well on reports of an improvement in freight rates on routes to the Middle East. Nippon Yusen, Japan’s biggest shipping company, rose 2.1% while rival, Mitsui OSK Lines advanced 0.7%, and Kawasaki Kisen jumped 3.7%. Sony, however, lost 2.4% as investors began to worry about the increased financial burden that would result from its plan to take a 30% stake in troubled Olympus. Among semiconductor-related issues, Elpida Memory, which has recently been under pressure from tumbling prices for memory chips and fierce competition from Asian rivals, leapt 4.6% on news that it is in merger talks with Micron Technology of the US and Taiwan’s Nanya Technology. In other sectors, Fast Retailing, operator of the Uniqlo chain of casual clothing stores, added 2.6% on expectations of higher sales of winter clothing after temperatures dropped and Tokyo experienced heavy snowfall overnight. The Nikkei average closed up 0.2% at 8,785 to register its best finish since November 4. The Topix index, however, was unchanged at 757. Trading volume declined with around 1.84 billion shares exchanging hands.
3
Data released on Wednesday revealed that Japan posted a trade deficit in 2011 of US$32 billion, the first annual trade deficit since 1980. Analysts attributed the deficit to the stronger Yen and to a slowdown in exports due to the impact of the March 11 earthquake and of the recent floods in Thailand that also disrupted supply chains. However, another factor has been increased imports of oil and liquefied natural gas as Japan’s nuclear power plants have been gradually taken off-line for maintenance and not brought back on-line because of opposition arising out of the on-going crisis at the tsunami-hit Fukushima Daiichi plant. On foreign exchange markets, the Yen lost ground with the US Dollar rising above Y78 and the Euro pushing up towards Y102, prompting buying of exporters. Consumer electronic giants, Sony and Panasonic added 4.8% and 2.5% respectively. Manufacturers supplying electronic components to Apple were also in favor after the US tech-company reported record sales and profits for the three months to the end of December. Murata Manufacturing, which supplies capacitors, rose 3.1%, Ibiden gained 3.3%, and Foster Electric jumped 4.6%. But mobile phone carriers selling the Apple iPhone failed to benefit with Softbank easing 0.5% and KDDI slipping 0.6%. Automakers performed well. Toyota climbed 3% after raising its 2012 domestic sales forecast by 6.5% to a level 36% higher than in 2011, helping Nissan, Honda and Suzuki Motor to all advance as well. Shippers, too, extended their gains of the previous day on firmer freight rates. Daiichi Chuo Kisen soared 19.5% on saying it is targeting a boom in US coal exports to China, India and Brazil and planning to increase the size of its fleet by 85 vessels to 280 by 2016. Mitsui OSK Lines, which is a shareholder in Daiichi Chuo Kisen, surged 7.6%, Kawasaki Kisen leapt 6.3%, and Kyoei Tanker rocketed 30.3%. Elsewhere, Komatsu, the world’ second biggest manufacturer of earth-moving equipment after Caterpillar of the US, was ahead for the 12th straight day, adding another 1.1% on hopes for stronger growth in China and other emerging markets. Overall, the Nikkei average closed up 1.1% at a fresh three-month high of 8,884. The more comprehensive Topix index climbed 1.3% to finish at 767. Trading volume was fairly heavy with almost 2.2 billion shares exchanging hands.
4
Share prices fell in trading in Tokyo on Thursday after the US Federal Reserve indicated overnight that it will likely keep its ultra-low interest rate policy in place at least through until 2014. This suggests that the Yen will remain strong against the Dollar for a prolonged period and there will be little or no relief from pressure for Japanese exporters. Industrial robot manufacturer, Fanuc, slid 2% despite announcing a 22% increase in net profits for the nine months through to the end of December. Komatsu also shed 3.3% on reports that growth in its operating profits is slowing. Even though an increase of 18% for the April to December period is expected, this is less than the 28% gain recorded for the six months through to the end of September. Japanese glass makers were sold following comments overnight from Corning of the US, which said that prices for liquid crystal display (LCD) glass will continue to decline. Asahi Glass dropped 3.6% and Nippon Electric Glass tumbled 6.7%. Elsewhere, however, Tokyo Electric Power (TEPCO) jumped 5.5% on news that the Japanese Government will take a two-thirds stake in the troubled utility in what amounts to a US$13 billion bail-out, one of the world’s largest ever outside the banking sector. TEPCO, which aims to return to profit by March 2015, is struggling to pay compensation and clean-up costs arising out of the crisis at its Fukushima nuclear power plant triggered by last year’s massive earthquake and tsunami. The Nikkei average closed down 0.4% at 8,849 while the Topix index also slipped 0.4% to finish at 765. Trading volume was moderate with just under 1.96 billion shares exchanging hands.
5
Concerns over the outlook for earnings dragged stocks down in trading in Tokyo on Friday after both Nintendo and NEC sharply downgraded their forecasts for the full-year to the end of March 2012. Both companies are victims of the strong Yen and of Apple’s success with its iPhone and iPad. Nintendo slumped 4.1% on saying that profits fell in the three months to the end of December, and it predicted a bigger than expected annual loss as its 3DS and Wii video game consoles struggle against the consumer shift to iPhones and iPads. NEC tumbled 7.1% on projecting a full-year net loss of Y100 billion and warning that it will cut up to 10,000 jobs because of weak demand for its smartphones, which compete with the popular iPhone models. Nippon Steel, the world’s fourth biggest steel producer, also shed 3.5% after it, too, cut its full-year earnings forecast by one-third amid slowing exports and declining prices. And chipmaker, Elpida Memory, sank 7.1% on reports that it is likely to post an operating loss of Y90 billion for the April to December period because of falling prices for its dynamic random access memory (DRAM) chips. Resource-related issues, however, performed well. Inpex Holdings, Japan’s leading oil and gas exploration firm, rose 2.9% while, among trading houses, Itochu added 2.8% and Marubeni advanced 2.5%. Elsewhere, Komatsu climbed 1.5% following the announcement overnight by its US rival, Caterpillar, of a 58% increase in quarterly profits on record sales of construction and mining equipment. Overall, the Nikkei average closed down 0.1% at 8,841 but managed a gain of 0.9% for the week. The broader Topix index slipped 0.5% to finish at 761. Trading volume was again moderate with just under 1.94 billion shares exchanging hands.
