Bloomberg re Tokyo Electron
11/10 18:37
Japanese Stocks May Decline, Led by Sony, Other Exporters
By Michael Tsang
Tokyo, Nov. 11 (Bloomberg) -- Japanese stocks may fall, led by exporters such as Sony Corp., after the dollar had its biggest drop in 2 1/2 months against the yen on Friday.
Semiconductor-related shares such as Tokyo Electron Ltd. may decline after the world's No. 2 supplier of chipmaking equipment slashed its full-year profit forecast by 75 percent.
``The exchange rate is hurting sentiment and shares of exporters are likely to suffer the most,'' said Yutaka Miura, a manager at Shinko Securities Co. ``There's still not much to cheer about in terms of chip-related demand.''
Nikkei futures for December delivery closed in Chicago at 8570 down from their previous close of 8650 in Osaka and at 8670 in Singapore.
The Nikkei 225 Stock Average added 0.1 percent to 8690.77 in the week just ended, while the Topix index dropped 0.5 percent to 866.89. The Topix has declined in five of the past six weeks.
The strengthening yen may damp investors' appetite for exporters at a time when concern over slowing U.S. demand and military action against Iraq has increased.
UN Resolution
The yen rose to its highest in 10 weeks against the dollar on Nov. 8., strengthening to 119.77 yen from 121.15 in New York trading on Friday.
The United Nations Security Council on Friday voted 15-0 to adopt a U.S. resolution demanding that Iraq agree to unrestricted arms inspections, ending a two-month debate over how to rid Saddam Hussein's regime of weapons of mass destruction.
The U.S., Japan's largest overseas market, will grow more slowly this quarter and next year than projected a month ago as consumers rein in spending and businesses delay investments, according to the latest Blue Chip Economic Indicators survey released yesterday.
Exports accounted for half of Japan's 0.6 percent economic growth in the second quarter.
``We're in an environment where there's not only currency risk, you have a risk of a weak global economy as well,'' said Wilfrid Pham, who helps manage about $2 billion at HSBC Asset Management Japan.
Canon Inc., which relies on overseas sales for 70 percent of its revenue, may also drop.
Tokyo Electron
Tokyo Electron may lead chip-related shares lower. The company, whose customers include Intel Corp. and Taiwan Semiconductor Manufacturing Co., lowered its profit forecast for the fiscal year ending March 31 to 500 million yen ($4 million) from its August forecast of 2 billion yen.
NTT DoCoMo Inc., Mizuho Holdings Inc. and other companies that do most of their business at home may also decline. The sub- indexes that track the performance of retailers, banks and brokerages were the three-biggest decliners on the Topix in the last five trading days.
Gross domestic product probably expanded 0.5 percent last quarter, after growing 0.6 percent in the second quarter when it posted its first increase in more than a year, according to the median of 22 economists in a Bloomberg News survey.
The report is due on Wednesday.
``I'm not at all optimistic about domestic-related stocks because nothing's happened in the past 12 years,'' said Masanao Yoshitake, who helps manage about $1 billion at Meiji Dresdner Asset Management Co. ``The economy will probably slow again this year, so there's little incentive to get into the market.''
Yoshitake holds shares of Canon Inc. and Ricoh Inc. and likes digital-camera equipment makers such as Sharp Corp.
Fanuc, McDonald's Japan
Fanuc Ltd. may rise. The world's largest maker of industrial robots plans to raise production of injection molding machines 30 percent to 300 units a month, starting early next year, the Nihon Keizai newspaper said. The company is increasing output as demand rises for parts used in mobile phones with cameras.
McDonald's Holdings Co. (Japan) Ltd. may decline. Its parent McDonald's Corp. said it will close 175 stores in 10 countries and eliminate as many as 600 jobs, reducing 2002 earnings. The world's biggest restaurant chain fell 7.9 percent.
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