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Japan

11/03/2010

Economic data in Japan was largely positive. GDP expanded at a better than expected annualised 4.6% in the fourth quarter of 2009. Within this, export and industrial production growth remained robust, but consumer spending also played an important role and capex showed signs of bottoming out. An earnings recovery seemed to be underway, as cost-cutting at many companies boosted their bottom lines, although a slight strengthening of the yen weighed on exporters. News flow was dominated by two stock-related stories. Toyota became embroiled in a series of recalls and investigations into safety. First KDDI then Sumitomo Corp announced intentions to buy large stakes in Jupiter Telecom at a hefty premium. The rubber products sector performed strongly, helped by good profit forecasts from Bridgestone and Toyo Tire. In the oil & coal sector, some refiners saw broker upgrades as capacity reduction appeared to be stabilising the sector. Laggards included the other products sector, where Nintendo was hit by the yen appreciation. Toyota's woes dragged down the autos sector. Financials, with the exception of insurance, performed poorly – consumer finance stocks were hit by reports that the government is likely to fully implement a revised money lending law. Once again there was very little difference in the performance of the small and large cap segments of the market.

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