Japanese Woes Killing Japan’s Blue Chips (OCPNY, TM, HMC, CAJ, HIT, SNE, PC, NMR)

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The realm of global geopolitics is going beyond nerve-racking in many instances.  It is not just the U.S. that is being held hostage by Europe as Japan has a pricey Yen against the Dollar and the Euro that makes exporting goods expensive and unprofitable for Japan.  Then throw in a massive accounting fraud scandal from Olympus Corporation (OCPNY) as well.

The admission of the camera and medical equipment maker Olympus admitting large payouts around expensive mergers and hiding losses is just one more fly in the ointment after admitting that it was hiding investment losses.  The move is apparently close to $700 million in payments for financial advice and expensive acquisitions of companies not related to its core operations.  The news is almost certain to open its directors and accountants to criminal and civil suits.  A prior CEO was even fired for attempting to investigate a series of acquisitions made before his tenure.

Toyota Motor Corp. (NYSE: TM) said that profit was down almost 20% and it has missed its earnings estimates and withdrawn guidance after Thailand flooding has stopped work at three plants.  Toyota ADRs hit a 52-week low in New York of $63,53 and shares are currently down 2.3% at $63.95.  These ADRs for Toyota are now close to challenging the $60 or so low of early 2009 during the panic.  Honda Motor Co., Ltd. (NYSE: HMC) is down 1.8% at $29.97, but it is still about 6% above its 52-week low of $28.04.

We are looking at electronics and equipment exporters out of Japan as well.  Canon Inc. (NYSE: CAJ) and Hitachi Ltd. (NYSE: HIT) are both lower. Sony Corporation (NYSE: SNE) hit a new 52-week low of $17.26 and its ADR is close to challenging the lows of the panic of early 2009.  Panasonic Corporation (NYSE: PC) is down almost 3% at $9.02 also at a new 52-week low; but its shares are now lower than they were during the early 2009 panic selling.

Nomura Holdings Inc. (NYSE: NMR) is also following the slide as the accounting shenanigans are likely to ensnare Japanese securities companies due to widespread corporate governance and oversight issues in Japan.  The Japanese pound their securities firms when they worry about widespread corruption or widespread fraud as well.  Nomura ADRs are down about 9.5% at $3.32 in New York trading after hitting a 52-week low of $3.16 today and the ADR is lower than during the panic selling of early 2009.

The world is full of challenges as is, but when corporate officers are hellbent on mischief it just adds in yet one more pause for concern for the little investors.

JON C. OGG