Nikkei gains in mixed trade, concerns about fundraising

19:13, November 16, 2009      

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Japan's 225-issue Nikkei Stock Average rose 0.2 percent Monday closing 20.87 points higher than Friday at 9,791.18. Positive economic data briefly elevated stocks in early trade, but the key benchmark Nikkei was in and out of positive territory in a mixed day of trading which saw diversified banking issues and equity financing plans weighing heavily on the market.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange retreated 0.7 percent, shedding 6.38 points to close at 860.42.

GDP figures released Monday revealed Japan's economy had expanded at quickest rate for two years and capital spending was up 1.6 percent in the three months through September, contributing to the nation's economic growth.

The 1.2 percent growth in the third quarter from the previous three months marked a second straight quarterly expansion, however the annualized 4.8 percent expansion in Japanese gross domestic product announced just before trading, only briefly buoyed the market as the sustainability of the recovery remains in doubt.

"The GDP figures briefly pushed stocks up just after the open, but it seems that there's still a lack of confidence in Japan's domestic economy, and there are also concerns about supply. There's a sense that there'll be a slowdown in Japan's economy in the Oct.-Dec. quarter, along with the problem that funds just aren't coming into Japan," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

Market players remained skeptical about the significance of today's GDP data and pointed towards the positive consumption figures being largely impacted by short-term government stimulus measures, added to this investor confidence was further dashed by news of yet more capital raising initiatives by monumental share-issuance in financial sectors.

Mitsubishi UFJ Financial Group lost 5.5 percent to 480 yen amid speculation Japan's biggest lender would issue about 11 billion U.S. dollars in new shares in a fundraising strategy to boost it's lending capabilities in Asia and fortify itself against strict capital requirements.

Mitsubishi UFJ may announce Japan's biggest secondary share sale this week as it prepares for stricter global capital rules, according to sources close to the matter.

Analysts and investors were left wondering whether or not other banks will opt to chart similar fundraising courses and if so to what extent Japan's three major banks all dragged on the market Monday.

Mizuho Financial Group lost 3.9 percent to 172 yen, whilst Sumitomo Mitsui Financial Group lost 5.86 percent to 3.050 yen.

"Concern about the dilution of shareholder value is weighing on the market," said Masaru Hamasaki, a strategist at Tokyo-based Toyota Asset Management Co.

Other major decliners Monday included electronics maker Hitachi Ltd., who lost 8.5 percent to 269 yen. Oki Electric Industry, maker of telecommunications equipment, also lost ground shedding 7.41 percent to 75 yen. Mazda Motor Corp. also ended trade in negative territory with losses of 4.2 percent to close at 201 yen.

Retailers offset losses made on the Nikkei Monday with convenience store chain Family Mart Co., Japan's third largest behind 7-Eleven and Lawson, edged up 0.4 percent.

Japan's biggest apparel retailer, Fast Retailing Co., owner and operator of budget chain Uniqlo, surged 5.2 percent to 17,540 yen, whilst Marui Group Co. Ltd., a major department store operator, gained 6.9 percent to 539 yen after Nomura Securities raised its rating on the company to "neutral" from "reduce", citing a more stable earnings structure.

Trade was moderate Monday, with some 1.8 billion shares changing hands on the Tokyo exchange's First section compared with last week's daily average of 1.7 billion shares moving.

Declining shares outnumbered advancing ones by a rate of 3 to 1.

Source: Xinhua
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