Second Month of Declining Orders For Japanese Machinery

The second month of declining machinery orders from Japan leaves business cautious about spending. In Japan, machinery orders are considered an accurate indicator of upcoming business investment. According to the Japanese government, Japanese machinery orders dropped by 1.4 percent to 8.9 billion dollars. This is the second month of declining orders.

The Japanese economy is suffering due to the strong yen and uncertainties about the world economy. Export demand has declined due to slower growth in major foreign markets. Current government statistics indicate minimal economic growth, or perhaps even economic decline for the next few months. Chiwoong Lee, a Goldman Sachs economist, said that “The recovery in capital expenditures continues to be slow.”

Takashi Wada, a Cabinet Office officail, noted that there are danger signals. He said that “Although we maintained the assessment that says they are ‘picking up,’ it is not that we are see bright prospects.”

Cross-Shareholdings At Lowest Rates Since 1991: Japanese Banks Sell-Off Shares

Japanese Companies reduce their cross-shareholdings of allied companies to the lowest level since 1991. Banks sell shares due to narrower global capitalization requirements.

In the year that ended March 31, stocks owned with corporate allies dropped to 4.9 % of the nation’s shares. This represents a two-point drop from the previous year and the lowest rate since 1991.

Keisuke Nitta, a strategist at NLI Research Institute, explained that “Cross-shareholdings held by banks are based on relationships with clients, so it doesn’t mean that the shares they hold are ones that are likely to grow.”He continued “A lot of the superior shares have already been sold off. It means a lot of unattractive stocks are still on their books.”

Banks are positioning for new regulations decided upon by the Basel Committee on Banking Supervision which require Banks to double the Tier 1 capital reserve. Tier 1 capital includes cash and equities. Therefore, volatile and poorly performing stocks will lower a bank’s ability to lend.
Since the International Accounting Standards Board issued guidance last year that the current market value of shareholdings are required to be included in financial statements, companies are reducing their holdings.

Hidehiro Tomioka, who manages about $1.4 billion at the Japanese asset management u_wpnonce=b29c1b17d4

Nikkei Falls 0.84 % Due To Geopolitical Tension And Eurozone fears!

Tokyo stocks fell on Wednesday and the Nikkei stock index lost 0.84 percent, as tensions arose over geopolitical strife over conflagrations in Korean and the instability of the eurozone after Ireland’s debt-rating cut stressed investor feelings.

Standard & Poor’s downgrading of Ireland’s long-term debt caused fear of a domino effect in the eurozone and lowered investor confidence.
Adding to investor uneasiness are increasing tensions in Korean after artillery exchanges between the Republic of Korea (ROK) and the Democratic People’s Republic of Korea (DPRK).

Japan’s nearness to the conflagrations lead to share dumping in the Japanese market, according to some analysts.

Tokyo Electron fell 2.1 %, down to 5,150 yen. Mitsubishi Corp. lost 1.4 percent to 2,115 yen. Mitsui & Co. dropped 0.8 percent to 1, 330 yen.

Japan’s Solar Frontier’s factory will become the world’s largest solar-cell factory.

In July 2011, when Solar Frontier KK’s new solar-panel plant starts operating at full capacity, this obscure company will become a major player in the rapidly growing solar-power industry. Its factory will be able to produce more photovoltaic cells than any plant in the world.

Solar Frontier ‘s parent company is one of Japan’s biggest oil companies, Showa Shell Sekiyu KK. Large oil companies like Royal Dutch Shell PLC and BP PLC and are cutting back investments on solar energy. However, in July 2011, the Japanese oil refiner will be opening its 100 billion yen (roughly $1.25 billion) solar-panel factory in Miyazaki, south Japan.

According to Shigeaki Kameda, Solar Frontier’s chief executive, “We know that the oil industry is not disappearing today or tomorrow. But if we don’t take this chance on solar now, we feel like we won’t get another chance.”

According to the Japanese research firm Fuji Keizai, total sales of solar panels are estimated to reach 8.998 trillion yen worldwide in 2025. This is more than a five times increase from last year’s sales. CIGS technology, which includes gallium, is forecast to grow the most, rising 26-fold to 900 billion yen.

Mitsubishi UFG To Purchase Royal Bank of Scotland Project Finance Loans

Mitsubishi UFJ Financial Group Inc. has negotiated an agreement to purchase Royal Bank of Scotland Group PLC’s (RBS) project finance loan portfolios for an undisclosed amount. This is a step that will enable Japan’s largest bank to expand its lending operations in the Middle East and other new markets.

The major loan assets involved are essentially loans for infrastructure projects in Africa, Europe and regions where the Tokyo-lender doesn’t have a strong presence in project finance. Mitsubishi hopes to enter these markets. The RBS portfolios are worth about GBP 3.8 billion

Katsunori Nagayasu , MUFG President said that “We want to use (the purchase of RBS’s project finance assets) as an avenue for pursuing further overseas growth.”

Over the past few years MUFG has participated in international transactions, including a $9 billion purchase of a 21% stake in Morgan Stanley two years ago.

MUFG’s purchase of the project finance ventures also demonstrates that Japanese banks are going after overseas growth to deal with limited potential in Japan.

G20 leaders meet to Strengthen to World economic system

SEOUL, South Korea – America’s move to flood its sluggish economy with $600 billion of cash, has triggered alarm in capitals from Berlin to Beijing. This has created tensions over currencies and trade gaps which are growing before the summit of global leaders this week.

The Group of 20 developing and rich nations are attempting to reform the world economy in the aftermath of the 2008 financial crisis. Two years ago the group’s leaders met for the first time. They set out an ambitious agenda to ensure stable economic growth and to strengthen financial supervision to prevent further meltdowns and to give developing countries more of a say in what’s going on.

The Federal Reserve’s decision to buy $600 billion of Treasury bonds over the next eight months helps tolower interest rates to spur growth and cut the high unemployment rate. However, this decision  is complicating  discussions on achieving those goals at the summit Thursday and Friday in Seoul

At the center of the discussions is the understanding that a decades-long global economic order centered on the U.S. buying exports from the rest of the world and running huge trade deficits while other countries such as China, Germany and Japan accumulate vast surpluses is no longer reasonable after the crisis.

The attempt to remake the world economy received some of its momentum from the rise of countries such as brazil, India, and China to become economic and political giants in their own right. The G-20 meetings themselves show the great changes since the crisis. They mark the end of a system in place since the 1940s in which the world economy was managed mainly by a small group of rich nations led by the United States, Europe and later Japan.

Hedging Gains in Asia

Most Asian markets fell on Friday. MSCI Asia Pacific Index was on the morning down 0.5 percent after reaching its highest level in two years the day before.

– Sentiment among investors is uncertain. Macro figures from the U.S. was a bit weak. “This week we’ve had a couple good days and investors may use this opportunity to take profit,” said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney to Bloomberg News.

Masaaki Shirakawa, Governor of the Bank of Japan said the U.S. contributed to the downside risk for the economy while the South Korean central bank explained its decision not to raise interest rates by weak growth in the European and U.S. economy in addition to a strengthening of its currency, reported Bloomberg News.

Among the few exceptions to the broad decline on Friday, the Chinese domestic stock markets rose by 2.23 percent in Shanghai and 1.01 per cent in Shenzen.

Industrial & Commercial Bank of China and China Construction Bank was among the winners in the banking index after Citigroup announced that Chinese banks will be required to show solid earnings growth for the third quarter, reported Bloomberg News.

A report from the Chinese Commerce Ministry on Friday that showed that foreign investment in China rose in September helped to further strengthen confidence in the outlook for the Chinese economy, writes Bloomberg News.

In South Korea, LG Electronics was up 2.4 percent and LG Display up 1.0 percent after another positive update from a brokerage house, wrote CNBC.

The mining company Rio Tinto also went against the trend and was up 1.1 percent driven by the company’s strong production report that was presented on Thursday, and signs that the company’s iron ore joint venture with BHP Biliton met resistance among EU regulators.

Key indicators: (at 7:06) Note: The market closes at different times)
Nikkei 225 (Japan) 9489.80 -0.98%
Topix (Japan) 825.82 -1.33%
Kospi (South Korea) 1899.35 -0.02%
Taiex (Taiwan) 8205.30 -0.12%
Straits Times (Singapore) 3217.06 0.69%
Shanghai Composite (China) 2950.81 2.47%
Shenzhen Composite (China) 1215.83 0.78%
Hang Seng (Hong Kong) 23747.36 -0.44%
Bombay Sensex 30 (India) 20393.43 -0.51%
S & P / ASX 200 Index (Aus) 4689.00 -0.21%

Japan Reinserted 44 Billion Euro Stimulus Package

Tokyo – In the fight against the economic crisis, the Japanese Cabinet issued another economic stimulus package at the equivalent of 44 billion euros. The money will go to employment and social programs, assistance for small businesses and investments in infrastructure.  There is hope that the package will stave off renewed appreciation of the yen. The package will be financed through a supplementary budget, yet Prime Minister Naoto Kan will still bring the stimulus package to parliament this month.

On Tuesday, the Japanese central bank had lowered its key rate for the second-largest economy in the world to almost zero percent to combat deflation. The bank announced  a program for the purchase of securities with a total of five trillion yen (about 44 billion euros) to help support the economy. The biggest problem for the recovery of the Japanese economy is the soaring yen. This has caused goods imported from abroad to be cheaper and Japanese exports to be one of the more expensive goods in the world.

Council for Science and Technology Has Selected 8 Priority Areas

Japanese Government Council for Science and Technology (and former Prime Minister Naoto Kan, president ) on Wednesday selected 8 key strategy areas of science and technology in particular to focus on as part of a budget allocation request “action plan.”  One of them is the 100,000 genome ( genome ) to help decode the prevention of disease “research Genomukohoto “ with the current emphasis on life and health. Another area of focus is the environmental field of long lasting fuel cell development.

This development plan adopted by the cabinet in June is the first attempt to realize a new growth strategy A decision will be made soon at the plenary session in order promote concrete policies and budget requests to the ministry efficiently .

The Genomukohoto study takes about 20 years to register 100,000 people who wish to track the health status and to develop prevention methods against diseases such as dementia and strokes while using genetic information to decipher preventative methods.

Policy Debate and Economy in Japan

The business community that the official election policy debates are closely watching the 24th . Yonekura Hiromasa Nippon Keidanren said, “We seek serious and responsible political debate “and said in a statement , when it comes to specifics of economic policy .

Future growth strategy and tax and fiscal reforms in spite directly related to business activities shall Naoto Kan government ” a strong economy , strong finances , a strong social security ” is not yet fully drawn toward the realization of the path Because there are complaints .

Sakurai Mitsumasa the Chairman of the Association of Corporate Executives for government fiscal management strategy ” does not indicate the specific content of tax reform , ” the report said. Economic growth strategy in the ” policy debate should be deepened to provide concrete measures for growth, ” he said.

Even Japanese Chamber of Commerce Chairman Okamura Tadashi , ” hopes to deepen the national debate over race in earnest , ” and issued a statement .

However , there were also concerns about world economic instability in the Japanese government has repeatedly change during the LDP prime minister in less than a year . Nippon Keidanren officials , ” they misspent time is spent on various procedures associated with change . shelf bleaching becomes important bills in the National Assembly would also late of the joint international expansion, “he said .

Kan inauguration , just came out of politics and policy dialogue momentum was cold , the business community is ” long-term stability of the regime should ” also reveals the real intention and direction.