Aug. 31 (Bloomberg) -- The yen strengthened after the Democratic Party of Japan won yesterday’s national election by a landslide, marking an end to single-party government that lasted almost unbroken for half a century. Japanese stocks fell.
The yen appreciated to 132.26 per euro in Tokyo from 133.85 in New York on Aug. 28, and strengthened to 92.77 per dollar from 93.60. The Nikkei 225 Stock Average fell 0.4 percent to 10,492.53 at the 3 p.m. close on the Tokyo Stock Exchange, reversing an earlier gain of 2.2 percent. Bonds rose.
“Some are saying the market has fully reflected the change of government, but the change is too big to be priced in,” said Hisakazu Amano, who helps oversee the equivalent of $18 billion at T&D Asset Management Co. “The impact of the DPJ victory on company earnings is still uncertain and investors can’t decide what to buy or sell.”
The DPJ routed the Liberal Democratic Party in yesterday’s vote, capturing 308 of 480 lower-house seats. The DPJ has pledged to revive an economy emerging from its deepest recession since World War II by boosting child-care spending, cutting taxes and limiting the power of bureaucrats.
The yen strengthened against all 16 major counterparts, gaining for a fifth day against the euro and rising to its strongest level versus the dollar since July 13. A tumble in Chinese stocks also fueled demand for the relative safety of Japan’s currency.
‘Risk Averse’
The Shanghai Composite Index slumped 5.4 percent, set for the lowest close since May 27. China is Japan’s biggest export market.
“The slide in China’s equity markets led to buying of the yen,” said Toshihiko Sakai, head of trading for foreign exchange and financial products at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “Investors are still risk averse.”
Honda Motor Co., which gets more than half its sales in North America, slid 1.8 percent. Canon Inc., the world’s biggest maker of digital cameras and which gets a third of its sales from the Americas, dived 3.3 percent. Toyota Motor Co., the world’s largest automaker, slumped 1.2 percent. Manufacturers of cars and electronics contributed the most to declines in Japan’s broader Topix index, which slipped 0.4 percent to 965.73.
The Nikkei added 1.3 percent in August for a sixth monthly increase, the longest stretch of gains since the nine months ended January 2006.
NTT, Retail Stocks
Nippon Telegraph & Telephone Corp., Japan’s biggest phone company and 34 percent owned by the government, jumped 3.2 percent, the most since Aug. 4.
The DPJ is supported by NTT’s labor union and is less likely than the Liberal Democratic Party of Japan to review the company’s status and organization, Hironobu Sawake, an analyst at JPMorgan Chase & Co., said in a report this month.
J Front Retailing Co., Japan’s No. 2 department-store operator, climbed 2.7 percent. Round One Corp., which operates bowling alleys, surged 5.2 percent after the higher sales outlook prompted Mitsubishi UFJ Financial Group Inc. to give its highest rating to the stock.
“If the DPJ’s proposed measures to bolster household income lift consumer spending, it will make an economic recovery more certain,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo.
Japan’s retail sales fell less than economists had estimated last month, a report from the Trade Ministry showed this morning. Monthly wages dropped for a 14th month in July, the Labor Ministry said today.
Boost Household Spending
The DPJ, which has pledged to boost the minimum wage, plans to eliminate unnecessary government spending and abolish some tax deductions to finance its economic aid package. DPJ leader Yukio Hatoyama said on Aug. 23 that he won’t let new bond sales for the next fiscal year exceed this year’s record.
Japanese government bonds rose, with the yield on the 1.5 percent bond due June 2019 falling half a basis point to 1.305 percent as of 3:15 p.m. in Tokyo.
The Markit iTraxx Japan index of credit-default swaps, which act as insurance against company defaults and are a measure of the perceived risk of such an event, was little changed today, BNP Paribas SA prices showed.
Nikkei futures expiring in September declined 0.8 percent to 10,450 in Osaka and fell 0.8 percent to 10,440 in Singapore.
No comments:
Post a Comment