Barefoot Investor: January 2013

Japan’s industrial production rose less than economists forecast, suggesting that a recovery in the nation’s manufacturing sector is lagging a weakening yen.

Output rose 2.5 percent from November, when it declined 1.4 percent, the Trade Ministry said in Tokyo today. The median estimate of 25 economists was for a 4.1 percent gain. Production fell 7.8 percent from the previous year.

The yen has weakened more than 12 percent against the dollar in the past three months, the most among 16 major currencies tracked by Bloomberg. It was at 91.06 per dollar as of 8:52 a.m. in Tokyo. The Nikkei 225 Stock Average (NKY) has gained more than 16 percent since the beginning of December.

Japan’s three largest automakers -- Toyota Motor Corp. (7203), Honda Motor Co. and Nissan Motor Co. -- all reported falling domestic production in December from the previous month.

Manufacturing in China, Japan’s biggest export market, is expanding at the fastest rate in two years, bolstering prospects that economic growth there will accelerate for a second straight quarter.

Weaker Yen

A weaker yen makes products relatively cheaper in export markets and boosts overseas earnings for Japanese companies such as Toyota and Canon Inc. (7751) when repatriated.

Twelve analysts covering Toyota, Japan’s biggest car manufacturer, have raised their earnings estimates for the next fiscal year.
The nation’s gross domestic product shrank at an annualized 3.5 percent pace in the third quarter of last year, the second straight contraction and meeting the textbook definition of a recession.


Asian stocks fell, with the regional benchmark index retreating from the highest since August 2011 on the busiest day of Japan’s earnings season, after the country’s industrial production missed estimates and U.S. growth unexpectedly stalled.

Nintendo Co., the world’s largest maker of game consoles, sank 4.7 percent in Osaka after forecasting an operating loss on lower-than-expected sales of its Wii U. Whitehaven Coal Ltd. fell 6.6 percent after saying first-half earnings will drop on lower prices. China Unicom Hong Kong Ltd. gained 1.8 percent in Hong Kong after the mobile-phone carrier said 2012 profit probably rose more than 50 percent.

Japan’s Nikkei 225 Stock Average (NKY) slid 0.5 percent after yesterday closing above 11,000 for the first time since April 2010. The nation’s industrial production rose 2.5 percent in December from the previous month, missing the 4.1 percent median economists’ estimate. More than 250 companies listed on Japan’s broader Topix Index are scheduled to report earnings today.

Kospi Index

Australia’s S&P/ASX 200 Index (AS51) declined 0.5 percent, while South Korea’s Kospi Index (KOSPI) retreated 0.3 percent. Taiwan’s Taiex Index slumped 0.3 percent even after its economy expanded more than estimated in the fourth quarter.

Hong Kong’s Hang Seng Index retreated 0.5 percent. The Shanghai Composite Index slid 0.2 percent, with trading volume 35 percent above its 30-day average at the time of day.

China Unicom

Among stocks that rose, China Unicom advanced 1.8 percent to HK$12.48 in Hong Kong. The nation’s second-largest mobile- phone company said 2012 net income probably increased more than 50 percent from a year earlier as it expanded its 3G and broadband user base. The carrier didn’t provide numbers.

Genting Singapore Plc gained 5.8 percent to S$1.55 after an executive at rival Las Vegas Sands Corp. said a Sands resort in the city had a “damned good quarter.” Genting and Las Vegas Sands operate Singapore’s two casinos.


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