Deflation Puts Some Retailers At Risk

HONG KONG -- Deflation is worsening in Japan, but not all companies will suffer.Prices fell 2.2% in August from a year earlier, according to statistics released Tuesday. The drop was largely due to weaker consumer demand coupled with cheaper oil prices. Further pushing down price tags on consumer goods like food, beverages, clothes and shoes, companies weighed down by excess inventory slashed their sticker prices.Japan's consumer price index calculates the costs of a bundle of staple goods and services, from cuttlefish and sushi to eggs and white bread, along with the cost of consumer products like toilet paper, laundry detergent and a man's suit, as well as expenses for a garage and rent.The "core-core" consumer price index doesn't include the costs of food items and gas, which can be volatile, and it too fell--by the largest margin in seven years.A sizable gap between supply and demand in Japan caused this round of deflation, according to an economist at Tokyo-based Nomura Securities Co., Naokazu Koshimizu."It's the biggest since 1955," said Koshimizu, who predicted prices would continue to fall until 2011. Hardest hit, he said, would be those retailers who rely on Japanese consumers for the bulk of their sales. For companies whose major revenues come from overseas, however, deflation is actually a boon, he said. It allows them to reduce wages for domestic workers, thereby cutting costs and improving their profit margins."The exporters can expect a big pick-up in profit in the second half of this year because of a reduction of costs, so manufacturers can expect to profit from the cutting wages," Koshimizu said. "The domestic sectors cannot expect a reduction."Among the biggest losers of the day on the Tokyo Stock Exchange was ...
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Asian Stocks Sag On U.S. Job Losses

HONG KONG -- Major stock markets across Asia closed the week on a downbeat note, as investors worried about the U.S.'s highest unemployment rate in 26 years. Japan's retail chains lost ground, as consumer sentiment remains week. Mining giant BHP Billiton slid on write-downs related to some of its disastrous nickel investments.There was also speculation that North Korea will fire a long-range missile toward Hawaii over the U.S. Independence Day holiday.Most Asian shares opened lower after the U.S. Labor Department said employers cut 467,000 jobs in June, over 100,000 more than economists had expected. The U.S. jobless rate rose 0.1% to 9.5%, the highest level since August 1983.The Nikkei 225 stock average dipped 0.6% to 9,816.07. Energy-related stocks lost ground, with Nippon Oil declining 2.0% to 529 yen ($5.51). Japan Airlines ( JALSY - news - people ) fell 1.6% to 184 yen ($1.92) after Japan’s leading business daily Nikkei reported that the carrier wanted to raise international freight rates 30% in July as shipments of LCD-panel components and autoparts to China rebound. Investors worried that exporters hurt by the global recession would seek cheaper rates at other airlines.Leading retail chain Seven & I Holdings ( SVNDY - ...
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U.S. Job Losses Deflate Asian Shares

HONG KONG -- Speculation that North Korea will fire a long-range missile toward Hawaii over the U.S. Independence Day holiday, and worries that the highest U.S. jobless rate in 26 years will weaken Asian exporters triggered a sell-off in major Asian markets on Friday.Most Asian shares opened lower after the U.S. Labor Department said employers cut 467,000 jobs in June, over 100,000 more than economists had expected. The U.S. jobless rate rose 0.1% to 9.5%, the highest level since August 1983. The bad economic data also sparked a 4% drop in crude oil prices to $66.45 a barrel in Asia at noon, down from the closing price of $66.73 in New York on Thursday.Adding to global uncertainty, Japan's Chief Cabinet Secretary, Takeo Kawamura, said it was possible that North Korea will fire a missile toward Hawaii on July 4. The Pyongyang regime’s test-firing of four short-range missiles into the East Sea on Thursday, he speculated, may be a prelude to a long-range launch as the U.S. seeks international support to enforce United Nations sanctions against North Korea.Energy-related stocks lost ground in Japan, with oil and gas field developer Inpex Corp ( IPXHY - news - people ) falling 2.8% to 726,000 yen ($755.50). Oil supplier Nippon Oil declined 2.6% to 526 yen ($5.48). Japan Airlines ( ...
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Fear Rules Asian Investors; Korea Hammered

Profit warnings and rising concern over bad loans sent Japan’s Topix index to 25-year low. Other major Asian markets also lost ground on macroeconomic concerns, although mainland China ended the day, if not the week, in positive territory. Japan's Nikkei 225 average fell by 141.27 points, or 1.9%, to close at 7,416.38, despite the yen's slide, at one stage to a six-week ebb of 94.13 to the dollar in Asian trading. The boarder Topix index fell 12.06 points, or 1.6%, to 739.53, its lowest close since January 1984. The slump in Tokyo on Friday showed that fresh initiatives by the Bank of Japan have failed to restore investor confidence. Exporters got no lift from the yen's depreciation, indicating broader worries about the deteriorating macroeconomic situation in Japan: Gross domestic product shrank by 3.3% in the last quarter of 2008, or an annualized 12.7%, the fastest decline since the 1974 oil crisis. The Bank of Japan announced Thursday that it was keeping the overnight call rate unchanged, at 0.10%, as widely expected. However, investors were disappointed that the central bank did not take further action to bring down long-term interest rates by intervening in the money markets to help cash-strapped Japanese companies. (See "Japan Investors Look Askance At Latest BoJ Move.") Japanese lenders lost ground in the wake of steep falls in banking stocks in the West (see "Bank Woes Leave Street Wobbly"), with (nyse: MFG - news - ...
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