Hong Kong, China (CNN) – Washington’s debt deadlock continued to rattle markets here in Asia-Pacific. We saw steeper declines than those on Wednesday with financial-related stocks weighing heavy on bourses across the region.
The Nikkei closed down 1.45% breaching that psychological 10,000 point mark to close at 9,901.35. Auto exporters and financials led today’s slide. Toyota and Nissan each fell more than 2%; Mitsubishi UFJ and Sumitomo Mitsui closed down about 1.5%. One of the biggest losers of the day was in the tech sector: Advantest fell by nearly 7%. The world’s largest maker of memory-chip testers announced its operating profit fell more than 50% from last year. On the flip side, Hitachi Construction jumped nearly 4% after a surge in its Q2 net profit.
The Hang Seng ended nominally higher, rising 0.13% to close at 22,570.74. It was a similar picture to that on the Nikkei with financials leading the fall. China Construction Bank closed down 0.94% while Industrial and Commercial Bank of China closed down 1.67%.
Financials dragged things down on the mainland as well. The Shanghai Composite closed down 0.54% to end at 2708.78. Beijing has also ordered new directives on loans, particularly in real estate, which soured that industry’s mood.
The Seoul Kospi followed the region lower to close 0.85% at 2,155.85. Asiana Airlines fell 4.74% after one of its cargo planes crashed earlier Thursday morning. Meanwhile, insurance companies were rattled by continued torrential rains slamming the country. LIG Insurance closed down 0.55%, Dongbu Insurance paired earlier losses to close exactly flat at 0.00% while Samsung Fire & Marine pulled out of earlier negativity to post a gain of 0.85% at the close.
Down under, the ASX 200 fell 1.62% to close at 4463.80 with financials and retailers leading the slide. Investment bank Macquarie Group closed down about 4.5%. Wesfarmers, the country’s second biggest retailer, fell about 2.39%. Retailers are worried about a possible interest rate hike in August when the Reserve Bank of Australia next meets. That follows yesterday’s higher than expected consumer price index figure of 0.9%. A reading of 0.7% was expected.
Asia-Pacific Currencies Gain
Major currencies in the Asia-Pacific strengthened against the U.S. dollar yet again as faith in the greenback – and Washington – continues to waver.
Over the past year, the U.S. dollar has weakened by almost 10% on the same-named U.S. dollar index. That measures its value against a basket of major world currencies including the Euro, the Japanese yen and the British pound.
In just the past month, when U.S. debt ceiling talks began to come to a boil, the Japanese yen has strengthened by nearly 4%. That has occurred against the backdrop of growing fears about the U.S. with investors moving into the safety of the Japanese currency.
And it’s a similar story with the Australian dollar. In the past month the currency has strengthened about 4.5% against the greenback. Last October it reached 1-to-1 parity with the U.S. dollar and it has not looked back since. Just yesterday, the Aussie neared a 30-year high on fears about the U.S. debt ceiling, compounded by that higher than expected CPI.
We’ve seen the same strengthening in theSingaporedollar. In the past month it’s strengthened about 3% against the dollar.
What does this mean?
There are winners and there are losers. It hurts exporters as it reduces their profits when they repatriate their earnings back home. It impacts travelers carrying U.S. dollars as it weakens their buying power in countries with stronger currencies. However, it may give a lift to retailers as the buying power of domestic consumers strengthens as consumers get more bang for their buck.
(CNN) – Japan’s businessmen now have a new way to navigate the country’s rigorous and sleep-deprived work environment: a necktie with an inflatable pillow.
Dubbed as the “Nemuri Tie,” or “sleep tie” in Japanese, the garment’s hidden secret is an inflatable bladder sewn into the back. Able to support up to 25 pounds, the silk and microfiber ties are inflated by blowing on a hidden nozzle.
In a country where “death from overwork” is common enough to have its own word, karoshi, the Nemuri Tie is among the latest unorthodox sleep-aids – such as the “lap pillow,” a pillow shaped like a women’s lap, and an umbrella with a built-in pillow – now being marketed to Japanese salariman.
I have a harsh symbol of Japan’s political cynicism on my desk. It’s a coffee cup, with the caricatures of the prime ministers on it. What makes it so cynical is that there’s a space to add four more faces.
When I bought it from the vendor, she explained that the space is there so the company can easily paint on the next prime minister’s face. “Because as we know,” she grimaced, “they never stick around that long.”
Her words bluntly state Japan’s problem with the revolving door at its top political job.
Naoto Kan became prime minister in June last year. If he stays on the job for another week, he’ll be the longest-serving leader of Japan in recent years.
It’s hardly an accomplishment, though, considering that his four predecessors were all on the job a year or less.
Tokyo, Japan (CNN) - Japan's economy, sputtering since the March 11 earthquake, tsunami and nuclear disaster, has fallen into recession, according to government figures released Thursday.
The country's gross domestic product fell by an annualized rate of 3.7% in the first quarter of the calendar year, according to the government, a much steeper fall than Japanese economists had predicted.
Comparing the first quarter to the previous year, according to Japan's cabinet office, the GDP fell 0.9%. In the fourth quarter of 2010, the GDP fell 0.8% as compared to the same quarter of the previous year. Thursday's GDP figures show a second consecutive quarterly drop, which fits the economic definition of a recession.
Industrial output in March was down 15.3%, the worst monthly drop in the country's history.
Businesses in the region affected by the tsunami were hit hard, with 10,000 of 24,000 businesses affected and 600 expected to close.
The figures, which did not include data from tourism or trade, underscore the fact that the natural disaster of March has become an economic disaster.
(CNN) – In times of crisis, fears run faster than facts.
That axiom has never been truer than the aftermath of the March 11 Japanese earthquake and tsunami, and the ongoing drama at the Fukushima nuclear power plant. And every new headline with the words "radioactive" only heighten those fears, like news that crews at the damaged plant are now dumping thousands of tons of radioactive water into the sea.
To be sure, the news is troubling and there are very real fears the nuclear fallout could get much worse. Yet as nuclear expert Michael Friedlander told CNN's Anderson Cooper, the offload into the Pacific Ocean will dilute the contaminated water below levels considered harmful. Still, he adds, "this isn't best practices" in the nuclear industry.
And it's hitting products from Japan. As CNN's Kyung Lah reports, Sven Kilian, who sells Japanese toys and gadgets on JapanTrendShop.com, runs a Geiger counter over toys before exporting - even though the toys have been no where near the Fukushima nuclear plant.
CNN's Martin Savidge talked to Japanese farmers who are facing ruin not because their produce has been contaminated, but because they carry the label, "Made in Fukushima." The situation is made worse for grower because a large number of countries - including the U.S., Australia, South Korea and Taiwan - have restricted Japanese imports as a cautionary measure.
Even things simply labeled "Japanese" are taking a hit abroad. A visit to local Japanese restaurant in Hong Kong found it nearly empty on a recent Saturday night - since the nuclear disaster, people have stayed away, even though the fish, vegetables, rice and noodles and most things on the menu weren't sourced from Japan.
"This is going to be a measurable impact," William Saito, an economic advisor to the Japanese government, told CNN. "And some industries and some companies will not survive."
Japan Airlines at one point in its proud history boasted the title “World’s Largest International Carrier”. Not so today and likely not ever again. But that may be a very good thing.
With a short four-paragraph press release at about 5pm Tokyo time, Japan’s flagship airline announced it was emerging from bankruptcy and ready to take to the skies again. But it’s quite a different JAL then the one we knew in January 2010, when it filed for Japan’s equivalent of bankruptcy protection. In the last 15 months, its bank accounts have been depleted as it’s paid off billions in debt. A third of its workforce – some 15,000 people – have been laid off. And the last planes of what used to make up the world’s largest Boeing 747 fleet in the world are rolling off the tarmac for good.
Today’s JAL aims to be a smaller – and profitable – airline. That’s in terms of network and in terms of plane size. To save on costs, the company says it will cut nearly 50 routes from its global network. To support profits, JAL says it will boost its partnership with oneworld, the airline alliance that includes American Airlines, Cathay Pacific and British Airways, to keep its passengers connected abroad. As for planes, the jumbo jet will be switched out for Boeing 787 Dreamliners. Maximum seating capacity will shrink from the 500s to the 300s but money will be saved as energy efficiency increases.
And these austerity measures for this aviation giant are working. From March to December 2010, JAL was finally able to report a profit of about $1.9 billion. That’s after three of the previous four years in the red. And today’s press release announced Japan Airlines successfully paid off about $4.8 billion in reorganization debt, while also receiving about $3 billion worth in new capital confidence from 11 financial institutions. So it would seem the flight path forward could turn out less turbulent than the routing of the past year.
That is, were it not for two natural crises and one nuclear catastrophe. Japan’s recent 9.0 magnitude quake, subsequent tsunami and growing radiation fears from Fukushima’s nuclear power plants are sending air passenger numbers down. That’s for both foreign and domestic travel. Not exactly the best of times for a recently bankrupt airline company to try and fill its empty coffers. Still, Japan Airlines’ new model may be better for it in the long run. It may just have to fly a little farther into the future to realize the profits it wants.
(CNN) – The total cost of the quake and tsunami on the Japanese economy could hit $235 billion and take five years for the nation to rebuild, according to a World Bank report released Monday.
“If history is any guide, real gross domestic product growth will be negatively affected through mid-2011,” the report said. “Growth should though pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate.
“While it is too early to estimate accurately, the cost of the damage is likely to be greater than the damage caused by the 6.9 magnitude Kobe earthquake in 1995,” the report added.
The report projects that cost estimates could range between $122 billion to $235 billion, or between 2.5% and 4% of GDP, citing government and private estimates. The Kobe earthquake, which killed nearly 6500 people, cost around $100 billion.
(CNN) – “Coordinated foreign currency intervention” may prove a mouthful, but get used to it. It’ll be the catchphrase for the next few news cycles, as we talk about Japan’s attempt at economic recovery. And as one J.P. Morgan analyst told me, this intervention is “a big deal.”
G7 finance ministers and central bank governors held a special conference call early Friday morning Tokyo time. Their goal with this intervention: to weaken a super strong yen. And at least for today, their actions are working. Before the G7 announcement, the yen was trading at around the 79 yen to the dollar mark. Right after the communiqué was released, the yen weakened sharply to push past the 81 yen mark.
But wait, a two-yen uptick? Is that really significant? You bet.
(CNN) - Within hours of the Japanese earthquake, natural gas price futures for summer delivery started to rise. Within three trading days, Barclays reports that UK natural gas prices have shot up more than 13%. It's only a matter of time before the suppliers pass that rise onto customers.
Why should this happen?
(CNN) – A spiraling crisis caused by the earthquake, tsunami and nuclear drama has turned into a financial crisis for the world’s third largest economy.
In a few short hours, the yen smashed through the 80 yen-to-the-dollar barrier, peaking at 76.25 yen. That was the highest level the currency has hit since World War II.
The health of Japan’s economy is based heavily on exports. A stronger yen can wipe billions of dollars off corporate balance sheets. For example, Toyota loses 30 billion yen, roughly $380 million, for each uptick of the yen against the dollar.
Analysts say timing played a big role in the sudden surge. Trade is typically thin around the end of the U.S. trading day and before Asian markets open. The yen, considered a safe bet in times of crises, had been gradually strengthening over several trading sessions. With risk adverse investors pushing the currency higher, it broke through 80 yen per dollar.
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