Japan: Best and Worst Performing ADRs Last Week and YTD

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 |  Includes: HMC, KUBTY, NIS, NSANY, NTT, SNE, TDK, TM
by: Steven Towns

A majority of Japanese ADRs trading on the NYSE/NASDAQ came under selling pressure last week. However, auto stocks rallied and TDK (TDK) led all advancers on strong earnings, an upbeat outlook and bullish analysts.

The Nikkei appears to be putting together another Monday rally.

It would be nice to see it hold the gains and at least 17,500 by the end of the week. Selected blue chip exporters are trading to the upside.

On average, the 28 Japanese ADRs lost a combined 2.6% last week. For the year, they are now in negative territory, down a combined average 1.2%.

Average weekly Japanese ADR returns over the past several weeks:

    05/04 - 05/11: +0.4%
    04/27 - 05/04: +0.6%
    04/20 - 04/27: -1.8%
    04/13 - 04/20: +1.5%
    04/05 - 04/13: -2.1%
    03/30 - 04/05: +1.3%
    03/23 - 03/30: -1.6%
    03/09 - 03/16: -1.9%

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

The five best performing ADRs last week:

    1. TDK (TDK) 7.5%
    2. Nissan (OTCPK:NSANY) 4.3%
    3. Sony (NYSE:SNE) 2.8%
    4. Millea Hldgs (MLEA) 2.3%
    5. Toyota (NYSE:TM) 1.6%

The five worst performing ADRs:

    1. Kubota (KUB) -13.8%
    2. NIS Group (NIS) -9.4%
    3. NTT (NYSE:NTT) -8.2%
    4. Internet Initiative Japan (NASDAQ:IIJI) -8.0%
    5. Nomura (NYSE:NMR) -6.0%

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

Click to enlarge chart

Japan-ADRs-wkly-05-18-07

Shares of Nissan (OTCPK:NSANY), Toyota (TM) and Honda (NYSE:HMC) were bought as yen weakness persists against the US$ and euro.

Mitsubishi UFJ (NYSE:MTU) and Mizuho (NYSE:MFG) both lost more than 3% for the week, ahead of their earnings releases this Tuesday, on concerns of negative impact from exposure to consumer lending.

The near-term outlook for these two mega banks is rather negative, due, among other things to the Bank of Japan having its hands tied in terms of further monetary tightening (which limits rate spreads), a weak stock market and slowing capex.

IIJ (IIJI) and NIS Group (NIS) continue to take a beating. There is broad weakness among smaller cap stocks -- nothing new in Japan since January '06. I am holding my positions for the time being.