By V. Phani Kumar
Japanese shares tumbled and the yen appreciated Monday as data
showing the nation's economy expanded for the first time in five
quarters did little to ease concerns about the health of the
world's second-largest economy.
Japan's gross domestic economy expanded at a slightly
weaker-than-expected 0.9% in real terms during the April to June
period from the previous quarter, on increased exports and a rise
in private spending.
But fears remained about business spending, which continued its
drop into a fifth straight quarter as companies delayed capital
expenditures on new plants and equipment.
"As corporate free cash flow decreases, we expect capex to
continue to contract throughout this year," said Junko Nishioka,
chief economist for Japan at Royal Bank of Scotland,
"Given exports started to slow down in June, especially to
China, and household consumption is quite fragile due to the
deterioration in the labor market, we believe GDP will slow in [the
third quarter] and beyond. In addition, the effect of the economic
stimulus policy packages is likely to gradually diminish," Nishioka
wrote in a report.
Japan's Nikkei 225 Average ended the day 3.1% lower at
10,268.61, after ending at its highest level since October on
Friday.
The broader Topix Index also declined 2.5%, with exporters hurt
by a stronger yen, a decline on Wall Street Friday and a fall in
commodity prices.
Shares of Elpida Memory (6665.TO) slipped 3.9%, while Honda
Motor Co. (HMC) gave up 3.9%.
The U.S. dollar was buying 94.59 yen, compared with 94.88 yen in
New York and 95.12 yen in Asia late Friday. Other currencies also
lost ground against the yen on risk aversion. The euro was recently
buying 133.61 yen versus 134.35 yen in New York Friday, while the
Australian dollar tumbled to 77.49 yen from 79.03 yen.
Whenever investors' appetite for risk wanes, they tend to seek
safer, lower-yielding currencies such as the yen.
In wider market action in Asia, China's Shanghai Composite
plunged 5.8%, Hong Kong's Hang Seng Index dropped 3.6%, Australia's
S&P/ASX 200 dipped 1.6%, South Korea's Kospi shed 2.8% and
India's Sensex gave up 3.1% in late Mumbai trading.