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Japan business confidence rises

TOKYO: Business confidence in Japan rose for the sixth straight quarter, but companies fear the improvement is temporary as cooling global growth and a persistently strong yen hurt shipments to overseas markets.
The Bank of Japan's quarterly "tankan" survey of business sentiment released Wednesday showed that the main index for large manufacturers rose to 8 from 1 three months ago.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
On the surface, it was an encouraging result, beating Kyodo News agency's average market forecast of 6. Stocks advanced to send the benchmark Nikkei 225 index up 0.6 percent.
The optimism, however, looks likely to be short-lived.
Big manufacturers predict that sentiment will fall back into negative territory toward the end of the year, underscoring growing doubts about the durability of Japan's economic recovery amid sustained strength in the yen.
The country has seen "a tremendous recovery in the past 18 months," said Richard Jerram, head of Asian economics at Macquarie Securities.
"But the momentum is fading quite quickly, and there are concerns that the yen strength could tip it back down again."
The tankan is a closely watched barometer of the country's economic health and helps the central bank guide monetary policy.
Analysts said the outlook reinforces the need to fight the strong yen and could compel the central bank to consider new monetary easing steps when it meets next week.
Trade figures earlier this week confirmed that export growth - the main driver of Japan's recovery - is slowing.
The deceleration poses a serious threat to Japan, which has depended on the rest of the world to offset lackluster demand at home.
But that expansion looks increasingly precarious as countries unwind stimulus measures that had underpinned global demand.
Moreover, Japanese exporters such as Toyota Motor Corp. and Sony Corp. face the onslaught of a strong yen, which hit fresh 15-year highs against the U.S. dollar this month.
That led authorities to intervene in currency markets to weaken the yen for the first time in more than six years.
An appreciating yen shrinks the value of repatriated profits for exporters and makes their products less competitive overseas.
Toyota has said that every 1-yen climb versus the dollar saps 30 billion yen ($357 million) from operating profit.
Japanese electronics company Sharp Corp. is moving some flat-panel TV production to China to insulate itself from the strong yen.
The Japanese currency has strengthened about 10 percent against the dollar this year.
The government's intervention on Sept. 15 initially pushed the dollar above 85-yen levels, but the Japanese currency has gradually recovered and was trading under 84 yen to the dollar Wednesday.
The tankan showed that companies are assuming the dollar will average 89.66 yen this fiscal year - a considerably different level than reality.
That points toward downward revisions of corporate profits and deteriorating sentiment, said Masamichi Adachi, senior economist at JPMorgan Securities Japan.
The "continued high level of yen should be significant drag on profits" among manufacturers, he said in a note to clients.
The central bank maintains that Japan is enjoying a modest recovery but acknowledges growing headwinds.
Bank of Japan Gov. Masaaki Shirakawa told business leaders in Osaka on Monday that the government would intervene again if necessary.
The BOJ "has great interest in and will pay close attention to developments in the foreign exchange markets and their impact," he said.
Amid the uncertainty, Prime Minister Naoto Kan unveiled a new 915 billion yen ($10.9 billion) stimulus package earlier this month to help the jobless find work and encourage consumer spending.
More money - as much as 4.6 trillion yen ($54.6 billion) - may be on the way if Kan draws up an extra budget for this fiscal year as expected.
The mood among big non-manufacturers improved to 2 from minus 5 in June.
They also expect the index to turn negative over the next several months.
Small- and medium-sized enterprises reported higher numbers, though their business conditions continued to lag.
The confidence index for medium-sized manufacturers rose to 4 from minus 6 three months ago.
The small manufacturers' index stood at minus 14, up from minus 18.
Big companies indicated they planned to increase capital investments by 2.4 percent this fiscal year through March 2011.
The Bank of Japan surveyed a total of 11,283 companies between Aug. 23 and Sept. 28. Almost 99 percent responded. - AP

 

Market Today

Stocks higher at midday, Ringgit rises to a fresh 13-year high

KUALA LUMPUR: The FTSE Bursa Malaysia KL Composite Index gave back some of its early gains, but was kept above the flatline at midday on Wednesday supported by Sime Darby Bhd’s sharp 2% advance.
Banking stocks came under some selling pressure, but shares in goverment-linked property developers UEM Land Bhd and Malaysian Resources Corp Bhd (MRCB) climbed on heavy volume.
In the currency market, the ringgit appreciated to a new 13-year high at 3.084 against the US dollar.
At 12.30pm, the FBM KLCI was up 2.82 points, or 0.2% to 1,462.49 points. The 30-counters strong index had earlier surged to an intra-day high of 1.466.29 points.
Market breadth was positive with 323 rising stocks versus 253 decliners. The broader FBM Emas index rose 0.2% to 9,783 points, while the FBM SmallCap Index advanced 0.3% to 11,587 points.
Shares in UEM Land jumped 11 sen, or 5.4% to RM2.13 on volume of 9.7 million shares, while MRCB climbed 10 sen, or 4.9% to RM2.13 on with 8.6 million shares transacted.
Stockbrokers predicted the two firms will be prime beneficiaries from government’s plans to boost development projects in the Klang Valley and Johor.
Meanwhile, shares in conglomerate Sime Darby, which derived significant portions of its income from palm oil and property businesses, rose 17 sen, or 2% to RM8.56.
Gamuda Bhd, which announced a good set of results late Tuesday, saw its share price traded 6 sen higher at RM3.86.
Investors’s mood across Asia was firm, with Hong Kong’s Hang Seng Index leading the charge with a 1.3% rise to 22,392 points. In Japan, the Nikkei 225 Average was up 0.7% to 9,567 points, while Korea’s main Kospi Index climbed 0.8% to 1,871 points.
In Singapore, the Straits Times Index rose 0.5% to 3,112 points, and in Indonesia the Jakarta Composite Index jumped 0.8% to a new high of 3,500 points.
In the commodity market, spot gold price shot up to another record at US$1,311 a troy ounce, while crude oil remained almost flat at US$76.55 a barrel.

FBM KLCI ends higher

KUALA LUMPUR: The FTSE Bursa Malaysia KL Composite Index closed 2.14 points higher at 1,461.78 points, as the ringgit climbed to a fresh 13-year high against the US dollar.
Out of the 30 stocks that made up the benchmark index, 15 counters ended higher, eight declined, while seven counters were unchanged.
Market breadth was positive, with 430 risers leading 283 decliners and 306 counters flat. Total market volume was 905 million shares worth RM1.4bil.
Among the big cap stocks, plantation firms were the big winners, with Sime Darby Bhd up 14 sen to RM8.53, PPB Group up 18 sen to RM17.08 and IOI Corp 5 sen higher at RM5.55.
CIMB Group declined 6 sen to RM8.17, while both Tenaga Nasional and Axiata were down 4 sen each.
The ringgit was traded at 3.0846 against the US dollar.
Regional bourses performance were mixed.
Thailand’s main stock index surged 1.4%, followed by a 1.2% rise in Hong Kong. The Shenzhen Composite Index tumbled 1.1%, but was almost flat in Shanghai.
Key stocks indices in Japan, Korea, Singapore and Indonesia ended higher, but were down in Taiwan and Australia. In the

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Today Market

Asian markets in the red

PETALING JAYA: Asian stocks ended Tuesday trade mostly in the red due to lingering concerns over the euro-zone debt crisis and weakening global economic growth as well as fresh concerns over the Chinese government’s intensifying effort to curb real-estate speculation and raising of China’s interest rates to curb inflation.
The FBM KLCI extended its loss after falling 5.07 points to close at 1,459.64 points at 5pm. Turnover stood at 976.98 billion shares worth RM1.35bil. There were 244 gainers, 493 losers and 289 counters traded unchanged on the Bursa Malaysia.
Leading gainers were Genting Bhd up 15 sen to RM9.88, CI Holdings Bhd up 12 sen to RM3.80, Coastal Contracts Bhd up 11 sen to RM2.37, Country View Bhd up 10.5 sen to 57 sen, Unisem (M) Bhd up 10 sen to RM1.90 and QL Resources Bhd up 9 sen to RM4.64.
Leasing losers were Tan Chong Motor Holdings Bhd down 24 sen to RM5.71, Fraser & Neave Holdings Bhd down 22 sen to RM14.48, Parkson Holdings Bhd down 16 sen to RM5.70, KFC Holdings (Malaysia) Bhd-warrants down 12 sen to RM1.22, Tenaga Nasional Bhd down 12 sen to RM8.88 and AirAsia Bhd down 11 sen to RM2.14.
Singapore’s Straits Times Index lost 16.11 points to 3,097.35, while Hong Kong’s Hang Seng Index fell 230.89 points to close at 22,109.95 and Shanghai’s A share index fell 16.61 points to close at 2,611.35.
Tokyo’s Nikkei 225 fell 107.38 points to close at 9,495.76, while Seoul’s Kopsi Index was down 4.86 points to 1,855.97.
Nymex crude oil at 4.56pm was quoted at US$75.63 per barrel, losing 88 cents; gold at 5.06pm was at US$1,288.70 an ounce, losing US$5.65. The ringgit was quoted at 3.0943 to the US dollar around 5pm.

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