5:00AM New York, 7:00PM Tokyo – Stocks in Japan declined on the worries that stimulus reversal in China may lower imports. Commodities linked companies declined. Corporate failures in Japan declined 16.6% in December. Japan prepares JAL to file bankruptcy and may launch discount carrier.
Japanese stocks dropped led by a plunge in Japan Airlines as the government prepares the troubled carrier to restructure through bankruptcy court. Commodities, resource and export companies fell after Beijing lifted its cash reserve requirements for banks to stem property speculation.
Commodity stocks also fell as gold prices plunged 2% to $1,129 per ounce and crude oil fell 1.3% to $81.5 per barrel.
In Tokyo trading Nikkei 225 Stock Average fell 1.3% or 144.11 to 10,735.03, and the broader Topix Index decreased 1.1% to 944.02.
In the first section of the Tokyo Stock Exchange 31 billion shares worth 1.6 trillion yen were traded and in the second section 282 million shares valued at 3.3 billion yen changed hands.
Of the Nikkei 225 index stocks, 45 increased, 174 declined and 6 was unchanged. Shinsei Bank Ltd. led gainers in the index shares with a rise of 4.5% followed by Sky Perfect Jsat Holdings jumping 2.9%.
China Raises Reserve Ratios to 15%
People’s Bank of China announced today that it has raised the amount of reserves that bank must hold by 0.5 percentage points to 15.5%. U.S. banks are expected to have 10% of the deposits in cash.
The revised reserves guidelines are expected to stem property prices and ease inflationary pressures in the economy. Large banks will be required to keep 15.5% in cash reserves and 13.5% for small banks.
Government stimulus of Rmb4 trillion and accommodative monetary policy has lifted bank lending to record levels of $1.3 trillion or Rmb9.23 trillion.
The report notes that China’s banks lent Rmb600 billion in the first week of January.
Japan Corporate Failures Fall 16.6% in December
Tokyo Shoko Research reported today that the country’s corporate failures fell 16.6% to 1,136 cases in December from a year ago, dropping for the fifth straight month.
Overall bankruptcies in 2009 decreased 1.1% to 15,480.
Japan to Set Up Budget Airline
Japan Today reported on its Web site that the Enterprise Turnaround Initiative Corp. of Japan is considering setting up a budget airline under a rehabilitation plan for Japan Airlines Corp in order to prop its loss making routes.
The government- backed body will link two international airports, Kansai International Airport in Osaka and Chubu International Airport, with popular tourist locations inside and outside Japan.
Operations of discount flights are estimated to begin by fiscal 2012 through March 2013.
Japan Airlines Corporation led the decliners in the Nikkei 225 Stock Average with a loss of 81.0% followed by losses in Sanyo Electric Co., Ltd of 5.9%, in JFE Holdings, Inc. of 5.0%, in Okuma Corp 5.0% and in Pacific Metals Co., Ltd 4.7%.
Shinsei Bank, Limited led gainers in the Nikkei 225 Stock Average with a rise of 4.5% followed by gains in Sky Perfect JSAT Holdings In 2.9%, in Sony Corporation of 2.8% and in NTT Corp of 2.7%.