Sunday, January 20, 2008

Japan's Nikkei 225 Futures Decline on U.S. Recession Concerns

By Masaki Kondo and Chen Shiyin

Jan. 21 (Bloomberg) -- Japan's Nikkei 225 Stock Average futures fell in Chicago on Jan. 18 after U.S. President George W. Bush's $150 billion economic plan failed to ease speculation the world's biggest economy will enter a recession.

U.S.-traded receipts of Toyota Motor Corp., Japan's largest automaker, retreated 2.1 percent from the closing share price in Tokyo on Jan. 18. Nintendo Co., maker of the bestselling Wii game console, declined 2.6 percent.

The Standard & Poor's 500 Index completed its worst weekly decline in five years after Bush called for the plan on Jan. 18 that offers corporate investment incentives and personal tax rebates. The U.S.-based Conference Board reported on the same day that its index of leading economic indicators fell 0.2 percent in December, the third consecutive drop.

``It will probably be a tough start today,'' Toshihiko Matsuno, a market analyst at SMBC Friend Securities Co. in Tokyo, said in an interview with Bloomberg Television. ``The reaction from U.S. stock markets showed Bush's economic plan didn't meet investors' expectations.''

Nikkei futures expiring in March last traded at 13,560 in Chicago, down from the close of 13,790 in Osaka and 13,780 in Singapore on Jan. 18. The Bank of New York Co.'s Japan ADR Index, which tracks American depositary receipts of Japanese companies, rose 1.4 percent on Friday.

The Nikkei added 77.84, or 0.6 percent, to 13,861.29 on Jan. 18, while the broader Topix index advanced 11.06, or 0.8 percent, to 1,341.50.

Toyota, Nintendo

Toyota derives more than a third of its sales from North America, while Nintendo gets the same portion from the Americas. Toyota has lost 9.9 percent this year and Nintendo has slumped 17 percent, compared with a 9.5 percent decline in the Nikkei 225.

Bush didn't offer specifics on a stimulus plan, saying he wants to reach an agreement with Congress. The administration is considering offering $800 tax rebates for individuals and $1,600 for households, people familiar with the discussions said.

Meanwhile, U.S. reports this week may show that sales of existing homes fell in December and first-time jobless claims increased, according to economist estimates in Bloomberg surveys.

Bank-related stocks may fall after Ambac Financial Group Inc., the world's second-biggest bond insurer, was cut two levels to AA by Fitch Ratings following the company's jettisoning of its plans to raise new equity. Ambac was the first bond insurer to lose its AAA credit rating.

U.S.-traded receipts of Mitsubishi UFJ Financial Group Inc., Japan's largest publicly traded bank, dropped 1.8 percent on Jan. 18, and Sumitomo Mitsui Financial Group Inc., the second-biggest, retreated 1.7 percent.

Fujitsu Ltd., Japan's largest computer-services provider, may move after the Tokyo-based company said it has yet to decide on whether to spin off its semiconductor business. The Asahi newspaper reported on Jan. 20 the company will establish a chip- making subsidiary by the end of March 2009 to increase efficiency.

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