Japanese stocks rally amid signs the global economy is recovering
Junko Nishioka, chief economist at RBS Securities Japan Ltd says "The worst is definitely over in terms of earnings"
Today’s figures add to signs the global economy is recovering from the worst recession since the Great Depression. The U.S. unemployment rate dropped for the first time in 15 months in July, prompting Nobel Prize-winning economist Paul Krugman to say yesterday that the economy “may be in the beginning of an upturn.” Analysts expect data next week will show the European economy shrank at a slower pace last quarter.
More than $2 trillion in spending by governments worldwide has stabilized global demand, helping Japanese 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.
The current-account surplus rose 144 percent in June from a year ago, the Finance Ministry said. Exports fell 37 percent, less than the 42.2 percent in May. Imports slid 43.8 percent.
Companies have raised earnings predictions and beaten analysts’ expectations over the past month. Some 15 percent of firms listed on the first section of the Tokyo Stock Exchange raised first-half earnings estimates since June, according to Tokyo-based Shinko Research, while 10 percent cut projections.
Honda Motor, Japan’s second-largest carmaker, last month reported net income of 7.5 billion yen in the quarter ended June 30, compared with a 40 billion yen loss forecast by analysts. Sony posted a net loss of 37.1 billion yen, half the 80 billion yen shortfall analysts predicted.
“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.