Japanese Shares Decline After PM's Resignation; Oil Companies Tied to BP Dive
Reaction to Prime Minister Hatoyama's resignation had a mixed effect on stocks with some predicting that his leaving bodes well for the economy. Strategist Ryoji Musha told Bloomberg that a change of guard would improve ties with the U.S. government and described the move "very positive."
But others anticipate little change in Japan's economic situation. Hatoyama's failure to move a U.S. military base off the island of Okinawa spurred his exit, sending his approval rating plummeting to a miserable 17%, according to a Nikkei poll -- a drop of more than 50% since his election last August.
Technology stocks closed lower today despite a fall in the value of the yen, which increases profits when exporters convert their overseas earnings back into the home currency. Mitsumi Electric, which makes computer parts, sank 3.4%, Panasonic lost 2.1% and Casio Computer fell 1.8%. Sony declined 2.8%, while rival game maker Nintendo plummeted 3.4%. Nintendo, which makes the popular Wii game console, has announced it will slash the price of it portable DS in Japan in an effort to clear stock before releasing the next model.
Mitsui & Co., a trading company with a multitude of businesses including real estate, food metal and textiles, unfortunately also has a stake in the BP-operated oil and gas field located in the Gulf of Mexico, according to Bloomberg. Today fallout from the BP disaster sent Mitsui shares plunging 8.3% as investors anticipate tighter drilling regulations. Japan Drilling, another oil extraction company that does business in the Gulf of Mexico, tumbled 7.1%.
In Hong Kong, Xinao Gas Holding was one of the biggest losers, plunging 11.4% on bribery allegations, reports Bloomberg Businessweek. Other commodity and energy companies also closed lower: Chalco, officially called Aluminum Corp. of China, dropped 2.2%, PetroChina, Jiangxi Copper and CNOOC all lost 0.7%.
Casino operators were among the best performers today as last month's revenue reportedly passed $2 billion. Shares in Wynn Macau surged 4%, Melco Crown leaped 3.3%, Galaxy Entertainment jumped 1.7% and Sands China advanced 0.9%.
In China, there was good news for car companies that have focused on creating hybrid and electric models. The government will be handing out $8,784 per electric car sold, and the money will go directly to the car maker. The program will begin in five major cities and also extends to hybrids, which will earn the makers $7,320 per car.
Today Chongqing Changan Automobile rocketed up 5.2%, Anhui Jianghuai Automobile gained 3.4% and SAIC, China's biggest carmaker, advanced 1.7%. Perhaps these financial incentives will encourage car makers to pour more resources into promoting green vehicles, which in turn could do wonders for the country's filthy air.