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Japanese ADRs had a mostly negative week after a partial recovery two weeks ago from the late Feb. global sell-off. The yen carry trade remains a hot topic. Also, subprime mortgage lending woes in the U.S. renewed concerns over the strength of the overall economy.

The 28 Japanese ADRs that are listed on the NYSE or traded on the Nasdaq posted a combined average 1.9% loss last week. This compares to returns of +0.6%, -3.8%, +0.5% and +4.2% in the four weeks prior.

Nearly 80% (22 of 28) ADRs finished the week lower, compared to 60% posting gains two weeks ago.

See the chart near the bottom for weekly and year-to-date returns.

The five best performing ADRs:

    1. TDK (TDK) 7.7% -- has received a lot of analyst attention following news it will take over Alps Electric's hard-disk drive business; up another 1% intra-day in Tokyo, possibly on news Goldman will keep TDK on its "strong buy" recommendation list

    2. Nidec (NYSE:NJ) 5.1% -- similar to TDK, has been trading higher following news of M&A activity; up another 2% intra-day

    3. Hitachi (HIT) 4.0% -- shares are actually down 1% intra-day after trading off as much as 3.6% on news of a parent-only loss forecast and dividend cut due to loss at hard-disk drive business; Japanese business press notes the stock has support given its low 1.1 to 1.2 price-to-book ratio and possible accelerated restructuring

    4. Kyocera (NYSE:KYO) 2.0% -- trading up 3.2% today on analyst share price hike

    5. NIS Group (NIS) 0.4% -- no news in particular

The five worst performing ADRs:

    1. Kubota (KUB) -8.7% -- shares struggling against U.S. real estate market uncertainty and potential global economic slowdown; losing 2.7% intra-day today in Tokyo on a KBC downgrade to "sell" from "buy", and new target share price of ¥900, from ¥1,400 previously and ¥1,053 on Friday

    2. Makita (OTCPK:MKTAY) -7.0% -- seems it could also have been sold last week due to concerns over strength of U.S. and global economy; its shares remain up double-digits on the year, therefore some likely profit taking; trading 1.2% higher intra-day

    3. Trend Micro (TMIC) -5.9% -- shares continue to fall; trading up 0.7% intra-day; difficult to call a bottom, but can't expect much more selling due to comparatively attractive dividend yield of 2.9% (for its ordinary shares), esp. for yield hungry Japanese investors

    4. Mitsubishi UFJ (NYSE:MTU) -5.7% -- the mega banks are still hated despite a BoJ rate hike last month; selling pressure persists due to doubt of another near-term hike; down 2.3% intra-day; Japanese business press reported some institutional investors are cutting their losses

    5. Mizuho FG (NYSE:MFG) -4.5% -- see comments for Mitsubishi UFJ above; down 0.7% intra-day

    * Note: Intra-day gains/losses are for ordinary shares 3/19/07

Disclosure: The author owns shares of NIS Group and IIJ and also owns IIJ call options.

Click to enlarge chart

Weekly-JP-ADR-03-16-07

Source: Japan: Best and Worst Performing ADRs Last Week