Nikkei edges down as oil price hits shippers

First Published:	26/09/2006 12:32:19
The Nikkei average slipped 0.49 percent in slow trade on Tuesday as Kawasaki Kisen Kaisha Ltd. and other shipping firms fell on higher oil prices, while drug stocks extended losses on concern about their profit outlook. Telecoms and Internet company Softbank Corp. (9984.T: Quote, NEWS, Research) rose after a source close to the matter said it planned to raise about 1.4 trillion yen ($12 billion) by securitizing Vodafone Japan. "Shippers and others had benefited from lower oil prices, and now we are seeing reverse moves," said Hiroyuki Fukunaga, chief strategist in the research division at Rakuten Securities. The Nikkei <.N225> lost 76.36 points to 15,557.45, extending its losses into a third session. The broader TOPIX index <.TOPX> was down 0.66 percent at 1,549.41. Some investors remain cautious and Haruo Otsuka, chief fund manager at Toyota Asset Management, said a possible slowdown in the United States, a key market for Japanese products, is keeping him from being aggressive. "Even if the United States ended up having an economic soft landing, I don't expect exports to the U.S. to grow substantially," he said. "I am taking a defensive stance." Retail investors too were subdued, said Zenshiro Mizuno, senior managing director of Marusan Securities Co. Ltd.'s equity trading division, as poor performances in the small-cap market have put them under pressure. The Mothers index <.MTHR> has declined 12 percent this month, compared with a loss of 3.6 percent in the Nikkei. "Appraisal losses in retail investors' stock holdings are deteriorating," he said. Mizuno also said investors are reluctant to jump into the market ahead of the Bank of Japan's tankan business sentiment survey next week. Meanwhile, the market was little moved by Shinzo Abe's election as Japan's prime minister by parliament on Tuesday. The new cabinet members were announced, with Hiroko Ota being appointed economics minister, Yuji Yamamoto as financial services minister and Koji Omi as finance minister. Jun Nishizaki, chief portfolio manager at Nissay Asset Management, said he was not impressed by the core members of Abe's cabinet, including finance minister Koji Omi, due to a lack of young, reform-minded people. "My first impression is that it looks somewhat backward-looking and that there may be a tough road ahead for the cabinet as well as for the market," he said. The Tokyo stock exchange saw its slowest day of trading since July 2005, with just 1.25 billion shares changing hands on the exchange's first section. Declining stocks beat advancers by a ratio of nearly three to one. SHIPPERS, AIRLINES LOWER Japan's third-largest shipping firm Kawasaki Kisen Kaisha sank 3.8 percent to 739 yen, while No.2 Mitsui O.S.K. Lines Ltd. lost 3.1 percent to 832 yen after concern about rising fuel costs reemerged with U.S. crude oil futures ending sharply higher on Monday in New York. For the same reason, Japan Airlines Corp. (9205.T: Quote, NEWS, Research) fell 2.6 percent to 225 yen. Analysts said investors took profits in shippers as Monday was the last day to be qualified for dividend payments for the half-year fiscal term to September 30. Energy stocks benefited from the higher oil prices. Oil and gas developer INPEX Holdings Inc. gained 2.1 percent to 907,000 yen and oil refiner AOC Holdings added 1.2 percent to 1,979 yen. One notable stock was Softbank, which jumped 3.8 percent to 2,190 yen after its securitization plan. "This is a good way for them to raise money, I think. Had they sought to borrow funds, I wouldn't have such a positive impression as it would cause some problems in terms of their finances on their balance sheet," said Jun Morita, a fund manager at Chibagin Asset Management. In the drug sector, Takeda Pharmaceutical Co. Ltd., Japan's biggest drug maker, fell 1.5 percent to 7,210 yen, extending its run of losses to a third session. Rival Astellas Pharma Inc. dropped 1.7 percent to 4,590 yen. Lehman Brothers said in a report on Saturday that it had lowered its view on the sector, as it expected pharmaceutical pricing pressure to worsen. Pigeon Corp., Japan's top baby care goods maker, ended up 1.1 percent at 2,005 yen after the company told Reuters its operating profit this business year would likely beat its forecast because of a rise in the fertility rate and growing sales of highly profitable products.
Source:  Reuters http://www.reuters.com