Tuesday, 30 September, 2008
Japan's stocks plunged toward a four-year low after a U.S. bank-rescue package failed, unemployment rose and production fell, raising concern the financial crisis is spreading through the broader economy.
Mizuho Financial Group Inc., Japan's second-biggest listed bank, and Nomura Holdings Inc., the largest brokerage, sank more than 6 percent. Inpex Holdings Inc., the nation's biggest oil explorer, tumbled 7.4 percent after crude fell the most in seven years. The Standard & Poor's 500 Index lost 8.8 percent in New York yesterday, the most since October 1987.
``The global financial market is nearing the brink of collapse, and the only real choice investors have right now is to sell stocks and hold cash,'' said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co. in Tokyo.
The Nikkei 225 Stock Average declined 544.54, or 4.6 percent, to 11,199.07 at the 11 a.m. trading break in Tokyo. The broader Topix index fell 51.30, or 4.6 percent, to 1,076.57, set for the lowest since October 2004. All 33 industry groups on the Topix slumped, with only 43 of the Topix's 1,716 members advancing.
The U.S. House of Representatives voted yesterday to reject a $700 billion rescue package for the financial system. Treasury Secretary Henry Paulson said he'll work ``as quickly as possible'' to salvage the plan that would give him the authority to buy bad loans from financial companies.
Japan's unemployment rate rose to the highest in two years in August while industrial production fell at the fastest pace in five years, the government said today, signaling the reach of the economic slowdown to households and corporations.
Falling Knife
Mizuho lost 6.1 percent to 433,000 yen, while Mitsubishi UFJ Financial Group Inc., Japan's biggest listed bank, slid 7 percent to 871 yen. Nomura sank 7 percent to 1,331 yen, leading a gauge of brokerages to its biggest decline in two weeks.
``Nobody wants to catch a falling knife with their bare hand,'' Fumikazu Onishi, a Tokyo-based senior strategist at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. ``Investors are waiting until they are sure the knife sticks in the floor.''
Inpex lost 7.4 percent to 850,000 yen. Mitsubishi Corp., Japan's largest trading company that gets more than half its profit from commodities, retreated 7.8 percent to 2,140 yen.
Crude oil for November delivery yesterday fell the most since November 2001 to $96.37 a barrel on dimmer prospects for the global economy. The yen appreciated against the dollar to as much as 103.54 from 106.33 at the close of stock trading in Tokyo, reducing the value of repatriated sales for Japanese companies.
Valuations
Electric Power Development Co., Japan's biggest power wholesaler, rose 5.1 percent to 3,320 yen, its first gain since Sept. 8, and making it the biggest winner on the MSCI World Index. The company, known as J-Power, increased its first-half earnings estimate by 64 percent on lower-than-expected fuel costs.
Shares included in the Nikkei 225 traded at 13.7 times trailing earnings and 1.3 times book value, the lowest in six months for both measures.
``Japan's market has fallen too far,'' said Yoshihiro Ito, a Tokyo-based senior strategist with more than 40 years experience at Okasan Asset Management Co., which oversees about $9.3 billion. ``Shares have become cheap relative to earnings and book values.''
Nikkei futures expiring in December retreated 4.6 percent to 11,240 in Osaka and slumped 4.3 percent to 11,295 in Singapore.
Source: http://www.bloomberg.com/
