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Market Update

Toyota Temporarily Shuts India Unit, Alibaba to List in New York

Author: Hiruki Nakamura
Last Update: 3:53 AM ET March 17 2014

4:30 PM Tokyo – Stocks in Tokyo traded lower after investors focused on rising tensions in Ukraine. Crimea voted to split from Ukraine with 97% of voting in favor. EU foreign ministers impose sanctions and travel bans on 21 Russians in retaliation. Alibaba plans to list its stock in New York.

Stocks in Tokyo declined after international tensions rose and investors shied away from taking more risks.

At a referendum in Crimea, citizens overwhelmingly approved to secede from Ukraine. Nearly 97% of votes were in the favor of an independent state and the regional parliament declared independence from Ukraine.

Ukrainian Parliament in Kiev approved to call thousands of reservists to join military.

Separately, Russian President Vladimir Putin said the decision to annex Crimea will be taken on Tuesday. The overwhelming majority of Russians approve the annexation despite the opposition from the EU and the U.S.

In less than ten hours, EU foreign ministers announced sanctions and travel bans on 21 people who they say played a key role in Crimean takeover by Russia.

The Nikkei 225 Stock Average fell 49.99 or 0.3% to 14,277.67 and the Topix index slipped 9.77 to 1,154.93.

The yen gained to 101.64 against the U.S. dollar.

Stocks in Review

Toyota said its Indian joint venture will temporarily suspend auto production after a wage dispute between the union and the local management.

The joint venture with Kirloskar Group in India has installed capacity of 310,000 units a year and accounts for 1.6% of Toyota’s global production. The two plants near Benglaru, Karnatak are located on a 432 acre facility.

The union is demanding a wage hike of Rs 4,000 or $68 a month and the management is offering a $50 a month increase.

After three rounds of mediation talks, the company decided to temporarily shut production after a production slowdown for 25 days and rising threats of violence.

India’s auto market faces a slowdown after a surge in demand in the last 12 years and Toyota holds 4.6% market share. Toyota sales in February declined to 10,100 units from 12,756 in January.

Toyota Kirloskar Motor will suffer a daily production loss of 700 units and the parent company awarded largest increase in wages in 21 years to workers at its plants in Japan only a week ago.

Two months ago the company said it may rethink its investment strategy in emerging markets after social unrest in Thailand disrupted its second largest production base after Japan.

Toyota Motor Corp rose 12 yen to 5,563 yen. Honda Motor Co fell 9 yen to 3,598 yen. Nissan Motor Co Ltd eased 0.3% to 850 yen.

Sony dropped 33 yen to 1,728 yen.

Softbank Corp soared 384 yen or 4.9% to 8,110 after its Chinese e-commerce affiliate Alibaba Group Holdings said it plans to list its share on an exchange in the United States.

Alibaba, the largest site to match Chinese makers with customers around the world, could not convince Hong Kong regulators about the company’s governance structure.

Fast Retailing Co declined 840 yen or 2.3% to 35,850 yen.

Aeon Co Ltd declined 4.3% to 1,122 yen after the Japan-based convenience stores operator estimated operating profit in the financial year through February 2017 at about 280 billion yen or $2.74 billion.

Nikon Corporation slipped 1.6% to 1,730 yen after the Chinese state television, CCTV blamed the Japanese camera-maker sold faulty products and poor customer service in China.

Nikon China said it “pays great attention to report of CCTV about Nikon D600” and the company has offered to replace defective cameras free of charge.

Orix Corporation dropped 3.1% to 1,401 yen after the financial service provider said it is in talk with Japanese unit of finance and leasing firm Hartford Financial Services Group.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc