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Asian Stocks Advance on Hon Hai Earnings, China Manufacturing; Rio Rises

August 31, 2009

By Patrick Rial and Masaki Kondo Sept. 1 (Bloomberg) — Asian stocks rose, led by technology and mining companies, after Hon Hai Precision Industry Co. reported greater-than-estimated earnings and China’s manufacturing expanded at the fastest pace in 16 months. Hon Hai Precision Industry Co., the world’s largest contract maker of electronics, climbed 5 percent in Taipei as Goldman Sachs Group Inc. raised its share-price target. Rio Tinto Group , the mining company that got 19 percent of its revenue in China last year, added 2 percent in Sydney. “China is seen as one of the few growing economies and it has influence over the commodity market because of its demand prospects,” said Yoji Takeda , who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. The MSCI Asia Pacific Index rose 0.3 percent to 113.76 as of 11:16 a.m. in Tokyo. Five shares advanced for every three that fell on the gauge. Speculation of a global economic recovery drove the index to the highest in more than 10 months on Aug. 14. The measure has lost 0.4 percent since then. China’s Shanghai Composite Index, which yesterday fell by the most since June 2008, added 0.2 percent. Hong Kong’s Hang Seng Index rose 0.7 percent. Japan’s Nikkei 225 Stock Average gained 0.5 percent. Nippon Sheet Glass Co. rose 3.4 percent after the Nikkei newspaper said solar glass sales are rising. Futures on the U.S. Standard & Poor’s 500 Index added 0.1 percent. The gauge dropped 0.8 percent yesterday amid concern the global rally in equities has outpaced the prospects for an economic recovery. The MSCI World Index sank 0.8 percent yesterday, the most since Aug. 17. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net .

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S&P 500 May Surge 40% as U.S. Duplicates Japan in 1990s: Chart of the Day

August 28, 2009

By Alexis Xydias Aug. 28 (Bloomberg) — U.S. stocks are behaving like Japanese equities in the 1990s, meaning the Standard & Poor’s 500 Index may return 40 percent in the next year, according to Bank of America Corp. The CHART OF THE DAY shows the Nikkei 225 Stock Average since 1980 and the S&P 500 during the past two decades, when adjusted for currencies. The Nikkei doubled between October 1998 and April 2000 in dollar terms, as the chart illustrates. The S&P 500 has risen 34 percent since March when the Dollar Index, a measure of the dollar against currencies in six major U.S. trading partners, is factored in. A “melt-up” rally in the U.S. may be triggered by central bankers keeping interest rates near record lows, an economic recovery or an undervalued dollar, Bank of America strategists wrote in an Aug. 26 report. “Even in economies overcoming credit booms, rallies can be powerful and last much longer than you think,” Bank of America’s Sadiq Currimbhoy , Arik Reiss and Jacky Tang wrote. Should the similarity between the U.S. and Japan persist, the S&P 500 will keep rising, partly because of gains in the dollar, the Hong Kong-based strategists said. “If there is one persistent similarity between Japan and the U.S., it is they both seem to be fighting a debt problem by producing more debt,” they added. “So, for equity investors, if these relationships were to repeat themselves, the risk for the U.S. market is that like Japan, the stock market ends up with big rallies and then sell-offs.” When adjusted for currencies, the Nikkei 225 peaked in December 1989, while the S&P 500 reached its high in September 2000. Following its jump through 2000, the Nikkei retreated three years. On the vertical axis of the Chart of the Day, 100 corresponds to the Japanese index’s record high. (To save a copy of this chart, click here.) To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net .

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Yen Heads for Second Weekly Gain Versus Dollar, Euro as Asia Stocks Drop

August 20, 2009

By Yoshiaki Nohara and Ron Harui Aug. 21 (Bloomberg) — The yen headed for a second weekly gain against the dollar and euro as Asian stocks dropped, boosting demand for Japan’s currency as a refuge. Japan’s currency rose against all 16 major counterparts as Japan’s Nikkei 225 Stock Average fell 0.7 percent and the MSCI Asia Pacific Index of regional shares lost 0.2 percent. Higher- yielding currencies declined versus the yen after Moody’s Investors Service said today that Australian state and territory budgets are under pressure from declining revenues while spending remains relatively high. “Recent optimism in the market is going through a correction, as stocks decline,” said Osamu Takashima , chief foreign exchange analyst at Bank of Tokyo Mitsubishi UFJ Ltd., a unit of Japan’s biggest publicly traded bank. ”That’s probably the reason why the yen is appreciating.” The yen gained to 93.92 per dollar as of 10:21 a.m. in Tokyo from 94.19 in New York yesterday. Japan’s currency rose to 133.84 per euro from 134.26. The dollar was at $1.4251 per euro from $1.4254. The Australia’s dollar fell to 77.83 yen from 78.31. The New Zealand dollar dropped to 63.47 yen from 63.78. The yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net ; Ron Harui in Singapore at rharui@bloomberg.net

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Japanese Stocks Advance After Crude Oil Prices Climb; Kobe Steel Gains

August 19, 2009

By Masaki Kondo and Patrick Rial Aug. 20 (Bloomberg) — Japanese stocks rebounded from their lowest levels this month after U.S. oil inventories unexpectedly declined, sparking a rally in prices of crude. Mitsubishi Corp. , which generates almost half its sales from commodities, added 1.8 percent after oil surged to the highest level in two months. Kobe Steel Ltd. rose 2.9 percent after a newspaper said it will get government subsidies for nuclear-plant production. All Nippon Airways Co. added 3.3 percent after Mitsubishi UFJ Financial Group Inc. boosted the stock to “outperform.” The Nikkei 225 Stock Average gained 46.55, or 0.5 percent, to 10,250.55 in Tokyo. The broader Topix index rose 4.18, or 0.4 percent, to 947.43. Yesterday, both gauges sank to their lowest levels since July 30. In New York, the Standard & Poor’s 500 Index rose 0.7 percent yesterday, rebounding from a 0.9 percent loss sparked by concern China’s economy may be faltering as the country’s benchmark equity gauge briefly entered a so-called bear market. “Despite what’s happening in China, we’ve yet to see a change to global liquidity flows,” said Mitsushige Akino , who oversees $624 million in assets at Ichiyoshi Investment Management Co. “Gains in the U.S. in the face of China’s ongoing correction are easing investors’ nerves.” U.S. oil stockpiles dropped last week by the most since May 2008, the Energy Department report showed yesterday. Crude oil for September delivery rallied 4.7 percent to $72.42 a barrel in New York, the highest settlement since June 11. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net ; Patrick Rial in Tokyo at prial@bloomberg.net .

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Japan’s Bonds Rise, Completing Weekly Gain, on Concern Recovery to be Weak

August 14, 2009

By Theresa Barraclough Aug. 15 (Bloomberg) — Japan’s bonds rose for the first week in a month as central bank minutes showed policy makers may extend their emergency credit programs into next year. Benchmark 10-year yields yesterday fell for a fourth day after the minutes of the July 14-15 meeting showed the Bank of Japan was concerned some business are still struggling to obtain credit. Bonds also gained this week as yields on inflation- protected securities signaled investors expect consumer prices to keep falling over the next five years. “I recommend buying,” said Eiji Dohke , chief strategist in Tokyo at UBS Securities Japan Ltd., one of the 23 primary dealers required to bid at government debt sales. “Domestic investors are concerned about a double-dip recession and are skeptical about the continued rally in stocks.” The yield on the 1.5 percent bond due June 2019 fell 5.5 basis points this week to 1.375 percent, the lowest since July 30, in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price rose 0.478 yen in the five- day period to 101.082 yen. Ten-year bond futures for September delivery advanced 0.36 this week to 137.98 at the Tokyo Stock Exchange. Not ‘Impressive’ Any recovery in the world’s second-largest economy is likely to be weak as there is no guarantee demand will increase once global stimulus programs are phased out, Bank of Japan Governor Masaaki Shirakawa said this week. “Even if we have a recovery, I don’t think its strength will be impressive,” he told reporters on Aug. 11 when the central bank kept the benchmark rate on hold at 0.1 percent. Since lowering the overnight rate in December, the central bank has been buying commercial paper and corporate bonds to keep borrowing costs capped. It has also offered unlimited loans to banks in exchange for eligible collateral. The Bank of Japan extended the steps for three months until Dec. 31 at the July meeting. The gain in bonds was tempered as stocks yesterday rose for a second day, damping demand for the relative safety of debt. The Nikkei 225 Stock Average rose 0.8 percent yesterday, capping a fifth-straight weekly advance. Ten-year yields had a correlation of 0.84 with the Nikkei 225 in the past week, compared with a relationship of 0.56 last month, according to Bloomberg data. A value of 1 would mean the two moved in lockstep. Deflation Outlook The difference between rates on five-year notes and inflation-linked debt, which reflects the outlook among traders for consumer prices over the term of the securities, was negative 1.6 percentage points yesterday. Consumer prices excluding fresh food declined 1.7 percent in June from a year earlier, the statistics bureau said on July 31. Inflation-adjusted securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation. The central bank on Aug. 11 said it remains concerned about “downside risks to economic activity and prices” even as the country’s deepest postwar recession abates. Spending by companies and consumers remains sluggish and the outlook is “attended by a significant level of uncertainty,” the central bank said. “The recovery we are seeing is a result from the various economic measures and don’t signal the actual recovery,” said Shinji Hiramatsu , senior investment manager at Sompo Japan Asset Management Ltd. in Tokyo. To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net .

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Japanese Stocks Gain on Machinery Orders, U.S. Jobs; Bridgestone Advances

August 9, 2009

By Masaki Kondo and Satoshi Kawano Aug. 10 (Bloomberg) — Japanese stocks rose after the U.S. jobless rate dropped for the first time in more than a year, orders for Japanese machinery increased and the yen weakened. Mitsubishi Motors Corp. added 1.2 percent. Hitachi Construction Machinery Co. advanced 1.7 percent. Sumitomo Metal Mining Co. gained 1.6 percent after metals prices increased for a fourth straight week. Bridgestone Corp., the world’s largest tiremaker, was set to climb after boosting its full-year outlook. The Nikkei 225 Stock Average rose 114.97, or 1.1 percent, to 10,527.06 as of 9:04 a.m. in Tokyo. The broader Topix index climbed 10.28, or 1.1 percent, to 967.04. “The improvement in the U.S. job market will increase demand for risk assets globally, including stocks,” said Tomochika Kitaoka , a senior strategist at Mizuho Securities Co. in Tokyo. “Exporters will get an extra boost in that the yen is sufficiently weak to help raise their profits.” In New York, the Standard & Poor’s 500 Index climbed 1.3 percent on Aug. 7 after a Labor Department report showed the joblessness rate dropped to 9.4 percent last month from June, the first decline since April 2008. Economists had estimated the rate would rise to 9.6 percent. Japan’s machine orders jumped 9.7 percent in June from May, the Cabinet Office said before markets opened today. Bookings, an indicator of corporate spending in the next three to six months, were estimated to have risen 2.6 percent, according to economists surveyed by Bloomberg. The Nikkei gained 18 percent in 2009 through Aug. 7 as manufacturing in China, Europe and the U.S. improved. Stocks on the gauge traded at 1.34 times corporate net worth last week, climbing back to their level on Sept. 29, according to data from Nikkei Inc., which compiles the gauge. The Japanese currency depreciated to as much as 97.78 from about 95.43 at the 3 p.m. close of Tokyo stock trading on Aug. 7. A weaker yen boosts the value of overseas trading at Japanese companies when converted into the local currency. A gauge of six metals in London added 1.7 percent, bringing its five-day advance to 7.2 percent and capping its fourth weekly gain. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net ; Satoshi Kawano in Tokyo at skawano1@bloomberg.net .

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Japan Machine Orders Rise for First Time in Four Months as Recession Eases

August 9, 2009

By Jason Clenfield and Tatsuo Ito Aug. 10 (Bloomberg) — Japanese machinery orders rose in June, ending a three-month streak of declines that came as companies cut costs to protect earnings. Bookings , an indicator of capital investment in the next three to six months, rose 9.7 percent from May, the Cabinet Office said today in Tokyo. The median estimate of 22 economists surveyed by Bloomberg was for a 2.6 percent increase. Signs Japan’s deepest postwar recession is moderating haven’t convinced manufacturers there will be a sustained revival in global demand. Companies including Toyota Motor Corp. are cutting capital spending, a driver of growth in past recoveries that made up 15 percent of gross domestic product last year. “The worst is definitely over in terms of earnings, but the incentive to invest is very limited in a world in which production levels are so low,” said Junko Nishioka , chief economist at RBS Securities Japan Ltd. in Tokyo. A survey published last week by the Development Bank of Japan showed Japanese companies will cut capital spending 9.2 percent this fiscal year. Reductions by manufacturers will be the steepest since 1993. Still, more than $2 trillion in spending by governments worldwide has stabilized global demand, supporting manufacturers such as Kubota Corp. , which is selling more farming equipment in China. Japan’s factory production rose 8.3 percent last quarter, rebounding from a record 22.1 percent plunge in the previous period. Better Profits Profit estimates for Japanese companies have been better than expected, helping lift the Nikkei 225 Stock Average 6.6 percent in the last month. Some 15 percent of firms listed on the first section of the Tokyo Stock Exchange have raised first-half earnings estimates since June, according to Tokyo- based Shinko Research, while 10 percent have lowered projections. “Earnings will probably keep improving gradually, but cash flows are very low,” said RBS’s Nishioka. “When companies are making the decision about whether to invest, what’s important isn’t how much sales or production are increasing, it’s the level that matters.” Toyota last week narrowed its loss forecast for the current business year, citing government incentives introduced in Japan, the U.S. and Europe to encourage car-buying. Even with an improved outlook, the company estimates it will sell 3 million fewer cars than it has the capacity to build. The automaker plans to cut capital spending 36 percent this year. Declining business spending is one of the reasons Japan’s recovery is forecast to lose momentum later this year. The world’s second-largest economy probably grew last quarter for the first time in a year, expanding at an annualized 3.8 percent pace after a record 14.2 percent contraction in the first quarter, according to the median estimate of 20 analysts. To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Tatsuo Ito in Tokyo at tito@bloomberg.net .

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Japanese Phone, Australian Resource Shares Advance in New York; NTT Gains

August 5, 2009

By Masaki Kondo Aug. 6 (Bloomberg) — Japanese phone and Australian resource companies rose in New York trading after Nippon Telegraph & Telephone Corp.

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Asian Stocks Fluctuate as Commodities Producers Gain, Carmakers Decline

August 4, 2009

By Jonathan Burgos and Susan Li Aug. 4 (Bloomberg) — Asian stocks fluctuated as commodities producers climbed on higher oil and metal prices, while Japanese makers of cars and motorcycles fell after Yamaha Motor Co

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Asian Stocks Rise as Mitsubishi UFJ Posts Profit, Nissan Unveils New Model

August 2, 2009

By Jonathan Burgos Toshiro Hasegawa Aug. 3 (Bloomberg) — Asian stocks gained for a third day, led by banks after Mitsubishi UFJ Financial Group Inc

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Mitsubishi UFJ Returns to Profit as Japanese Banks Report Improved Results

July 31, 2009

By Finbarr Flynn July 31 (Bloomberg) — Mitsubishi UFJ Financial Group Inc. , Japan’s biggest bank by market value, posted its first profit in three quarters on earnings from loans and a share market rally that boosted the value of stock holdings. Net income rose to 75.9 billion yen ($797 million) for the three months ended June 30 from 51.2 billion yen a year earlier, the Tokyo-based bank said in a statement today

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Mitsubishi UFJ Returns to Profit as Japanese Banks Report Improved Results

July 31, 2009

By Finbarr Flynn July 31 (Bloomberg) — Mitsubishi UFJ Financial Group Inc. , Japan’s biggest bank by market value, posted its first profit in three quarters on earnings from loans and a share market rally that boosted the value of stock holdings. Net income rose to 75.9 billion yen ($797 million) for the three months ended June 30 from 51.2 billion yen a year earlier, the Tokyo-based bank said in a statement today. Mitsubishi UFJ benefited from a 23 percent gain in Japan’s Nikkei 225 Stock Average in the quarter after recording a 409 billion yen loss on its shareholdings last fiscal year.

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Most Asian Stocks Decline as Commodities Producers Decline; Honda Rallies

July 29, 2009

By Patrick Rial and Masaki Kondo July 30 (Bloomberg) — Most Asian stocks declined as falling commodities prices sent materials producers lower, offsetting gains by Honda Motor Co. and Nomura Holdings Inc. after they reported earnings.

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Japanese Stocks Advance After Oil, Metals Prices Rise; Mitsui, Itochu Gain

July 26, 2009

By Masaki Kondo and Kotaro Tsunetomi July 27 (Bloomberg) — Japanese stocks rose after oil climbed to a three-week high last week and metals prices climbed for a 10th day. Mitsui & Co., a Japanese trading house that gets about half its profit from resources, rose 1.7 percent, while Mitsui Mining & Smelting Co. added 1.2 percent.

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