Japan Trade Surplus Surges on Auto, Steel Demand

Japan's August trade surplus surprised to the upside, nearly quadrupling year-over-year to ¥743.2 billion ($6.5B) -- more than triple economists' estimates. Exports increased 14.5%, compared to 11.8% in July and better than economists' forecast of 10.9%. Imports rose 5.7%, a 33% month-over-month decline. The strong exports are credited to solid demand for autos and steel in Europe and China, easing some concerns of a slowdown in the U.S. Auto exports to China surged 88%. Overall, exports rose 23.8% to China, 16.4% to Asia as a whole, 15.6% to the EU and 4.6% to the U.S., year-over-year. Imports from the U.S. fell 4.6%, but increased 10.8% from the EU, 8.5% from China and 6.6% from the Asian region. While analysts agree export growth was high, they remain worried about slower global growth induced by U.S. subprime market woes. The Nikkei 225 traded Wednesday within a narrow range, ending 34 points (0.2%) higher. Sony was among the best performing exporters, +1.7% to ¥5,430. Auto stocks traded lower on concerns of U.S. weakness, despite the robust China sales. Nintendo shares gained 1.1% to ¥59,800 after the company Tuesday soared past Canon Inc. to become Japan's second most-valuable company, behind Toyota.

Sources: Ministry of Finance Trade Statistics, Bloomberg
Commentary: Japan's Revised Q2 GDP Disappoints; BOJ Hike Unlikely • Japan: Don't Waste Your Time and Money • Japan: Nomura's September Individual Investor Survey
Stocks/ETFs to watch: TM, HMC, NSANY, SNE, MC, CAJ, NTDOY.PK. ETFs: EWJ, FXY

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