Japan’s Nikkei-225 Driven Down by Automotive Industry
Japan’s automotive industry is one of the critical drivers of the country’s economic progress. The pandemic paralyzed not only automobile productions but especially sales due to travel restrictions and economic underperformance.
Nikkei-225 was grim on Thursday. Falling stocks advance before those in an upward trajectory, mainly driven by food, transportation, and electric power and gas industries.
Toyota reported better-than-forecasted earnings at a modest amount of $131.73 million, but the log is the company’s worst since June 2011.
The automotive corporation reported a 74% lower net profit for the April-June quarter compared to last year’s yields. Nevertheless, the modest gain is above analysts’ expectation of $1.69 billion net loss.
The motor corporation experienced halved global sales resulting in 98% plummet from its first-quarter operating profit. This is due to the successive shut down of operations that drive customers out of the dealership.
A projected 13% of Toyota’s global sales will carry until March 2021, brought mainly by lower performance in the North American market. It expects to sell only 9.1 million units from 10.46 million in 2019, marking its lowest sales in nine years.
Similarly, Honda fell into the red after releasing an expected drop in net profit by 64%. The year to March loss projection amounts to $1.56 billion. The sharp slump in India and other key markets are the leading cause of the setback.
Adding to the burden, the multinational conglomerate recalled 1.6 million units of its minivans and SUVs from North America due to technical issues. Among the cases reported are malfunctioning dashboard displays and damaged locking mechanisms on sliding doors.
Nissan Motor Co and Mitsubishi Motor Corp all reported a quarterly loss. The automobile industry witness crash in sales from March to May period.
Foreigners Flee Japan’s Stock Market
Overall, Japan’s Nikkei-225 dropped 0.43% or 96.70 points to 22, 418.15, with stock trading volume plummeting to 1,079.78 from 1,204.80 in Wednesday. Sluggish stock trading overseas further dented the fall, led by the weak performance of Hongkong shares.
Foreigners are Japan’s biggest net offloaders of shares after three weeks of buying streak. This is due to the rising fresh daily cases of COVID-19, dampening hope for economic stimulation.
In July 31 reports, the value of stocks which overseas investors freed amounts to $6.90 billion or 727.26 billion yen. This translates to 462.43-billion yen worth of shares in the cash market and another 264.83 billion yen in derivatives. This is the highest recorded sell by overseas patrons highest since mid-March.
On the other hand, Japanese investors mark the fourth week of successful net selling in overseas markets. The stockholders let go of a total of 919.3 billion yen.
The yen continues to firm against the dollar closing at 105.61, driving Nikkei-225 index further away from its pre-pandemic performance.
