Japanese market higher and posting gains

Thursday, 28 April 2011

FashionUnited Top 100 Index closed at 1311.51 Wednesday, rising by 7.42 points and benefiting from the growth wave that swept the international stock markets. Meanwhile, JJB Sports, the leisure wear retailer founded by ex-footballer Dave Whelan, has resorted to delisting from the London Stock Exchange in order to survive.

JJB investors, including activist hedge fund Crystal Amber and Microsoft billionaire Bill Gates, voted overwhelmingly to issue more than 160million new shares, pumping £65million into the ailing chain. The athletic apparel firm is trying every way to stay afloat.

As reported by the Daily Mail, JJB (down 1p to 25.5p) will use the capital to cut its debt of £21.2million, refurbish 133 stores and close up to 89 others. By issuing so many new shares the company – whose market free-float will fall to 14 per cent, breaking listing rules – will be forced to quit the London Stock Exchange and re-list on the smaller and cheaper Alternative Investment Market. The move is a last throw of the dice for JJB Sports, which is unlikely to pay another dividend until at least 2016. If the gamble fails, lenders are likely to withdraw a £25million overdraft. This movement took place in a Britain which economy has barely recovered the output lost in the weather-hit final three months of last year, as economists expect the UK  Office for National Statistics to confirm late Wednesday, with the release of first-quarter GDP numbers. George Osborne, who was given the data early, appeared to confirm fears that the recovery has lost momentum by informing the Cabinet on Tuesday that the economic situation remains "difficult", the Telegraph reported.

Elsewhere, Standard & Poor's has downgraded its outlook for Japan’s sovereign debt from “stable” to “negative,” citing concerns that reconstruction costs following the March 11 disaster would increase Japan’s fiscal deficits. The rating agency cited concerns that the Japanese government would face difficulty providing a clear plan for paying for reconstruction, which S&P estimates as ranging from Y20,000bn ($245bn) to Y50,000bn, writes the Financial Times.

However, and buoyed by a bright close on Wall Street overnight, the Japanese stock market is trading notably higher on Wednesday with stocks across several sectors posting strong gains. Large retailer sales fell an annual 7.7 percent on year, again well below forecasts for a 4.7 percent decline following the 0.5 percent rise in the previous month.

On a monthly basis, retail sales plunged a seasonally adjusted 7.8 percent versus expectations for a 4.7 percent decline after adding 0.8 percent in February. Defying these figures, Fast Retailing, JFE Holdings, CSK Corp., Nippon Express, Daiichi Sankyo and Citizen Holdings closed up 2-4 percent.

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