Asian Markets: Survey shows more cuts in store for Japanese businesses
In Asia Thursday, the MSCI Asia Pacific Index slid 1.2 percent. With China's markets closed, including Hong Kong's Hang Seng, investors closely watched Japan, where the Nikkei dropped 1.5 percent to close at 9,979.
This morning, the Bank of Japan released its Tankan Survey, which indicates business confidence and is a gauge of the health of the Japanese economy. The poll showed that large Japanese businesses are planning to reduce spending by 10.8 percent this year, sending shares sharply lower in many of the country's blue-chip companies.Electronics companies lost value across the board, and were the second worst performing sector. Toshiba Corp. (TOSBF) lost 2.5 percent, Canon Inc. (CAJ) dropped 2.8 percent and Sony Corp. (SNEJF) fell 2.8 percent. Sony reaps 23 percent of its sales from the U.S. and suffered both from the downturn in local investor sentiment due to the Tankan Survey, and from the news out of America that the jobless rate had increased more than expected.
Electronics-related shares also plunged with memory chip-testing company Advantest Corp. (ADTTF) sinking 5.8 percent after Credit Suisse downgraded the company's rating, and chipmaker Elpida Memory Inc. (ELPDF) nosedived 8.6 percent after a U.S. senator said he would use WTO sessions to press government officials to cut subsidies to the Japanese chipmaker. He claims the $1.8 billion Elpida receives in subsidies is pushing down the price of computer chips and damaging U.S. makers.
Kawasaki Heavy Industries Ltd. (KWHIY), which produces machinery and is a leader in industrial robots, slumped 4 percent, while Fanuc Ltd, (FANUF), which also produces robots, slipped 3.1 percent. Car companies also slumped, despite news that Japanese car sales increased 3.5 percent last month from a year earlier. Toyota Motor Corp. (TOYOF) slid 1.7 percent and Nissan Motor Co. (NSANY) was down 1 percent.
In South Korea where the KOSPI dropped 1.7 percent to close at 1,644, automakers were also down, with Hyundai Motor Co. (HYMLY) plunging 8.1 percent and Kia Motors Corp. (KIMTF) plummeting 6.7 percent.
Korean shipbuilders were also in trouble with Hanjin Heavy Industries & Construction Co. losing 6.5 percent after Lloyd's List reported the shipping company is in danger of having many of its orders canceled by mega container line, CMA CGM which is on the brink of bankruptcy.
A bankruptcy filing by the world's third biggest shipping line would not be a great start to the month that is historically bleak for the financial markets.