Japan’s battery shares jump on electric car hopes

Shares of Japanese car battery makers shot up this week as investors expected growing concerns over global warming and persistently high oil prices to boost demand for electric cars.

Japan’s largest car battery maker GS Yuasa Corp (6674.T: Quote, Profile, Research) rose 6.9 percent on Wednesday, adding to a 16 percent gain in the previous two sessions. Furukawa Battery (6937.T: Quote, Profile, Research) soared more than 40 percent this week.

The rally started on Monday on news that Japan’s postal services system is looking to switch its entire fleet of about 21,000 short-distance delivery vehicles to zero-emission electric cars starting this business year. [ID: nT252637]

GS Yuasa has set up a joint venture with Mitsubishi Corp (8058.T: Quote, Profile, Research) and Mitsubishi Motors Corp (7211.T: Quote, Profile, Research) to produce lithium-ion batteries, a type of batteries used for electric cars. The joint venture plans to start selling them in the year starting April 2009.

“We plan to sell (the batteries) to other carmakers, and automakers both in Japan and overseas have shown interest in them,” said Masanori Kitamura, GS Yuasa spokesman.

Market participants said battery makers have joined the growing list of environment-related stocks, an increasingly popular category that includes makers of non-fossile burning power plants such as nuclear reactors. “Battery (shares) are quite strong, basically because hybrids and electric cars are going to be big from now,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“Oil prices may fall, but they’ll still stay at a pretty high level, and people are feeling the need to reduce carbon.”

Oil has retreated from record highs, but stayed far above $100 a barrel.

But some battery makers were puzzled by the steep rise in their share price, saying there were no fundamental factors to back up the move.

Officials of FDK Corp (6955.T: Quote, Profile, Research) said they were surprised to see their firm’s share price double in just three days.

“We are not working on lithium-ion batteries for electric cars. We don’t have any car battery business,” said Shigeaki Niida, spokesman of FDA, a maker of dry cell batteries.

“We were happy on the first day (of the rise) since our shares had been moving in a low range. But we are confounded to see it keeps rising on day two and three.”

— Reuters

Japan PM faces likely censure

Unpopular Japanese Prime Minister Yasuo Fukuda could well suffer an embarrassing if non-binding censure in parliament’s upper house next week, but for now the betting is he can keep his job at least for the rest of the year.

Japan’s main opposition Democratic Party is likely to submit the rare censure motion against Fukuda in the opposition-controlled upper house, where it would almost certainly pass, party sources said on Thursday.”At least in the view of party executives, this is definite,” Kyodo news agency quoted a top party official as saying. “After that, it’s a question of timing.”

Fukuda’s ratings have slipped below 20 percent in some polls as he has struggled to cope with a divided parliament, where the opposition has taken every opportunity to delay key legislation.

That has prompted talk that the ruling party may replace its leader after he hosts a Group of Eight summit in July.

But Fukuda has brushed off talk of a censure motion, telling reporters on Wednesday in Rome, where he attended a world food summit, that it might be a frivolous step by the opposition.

Democratic Party leader Ichiro Ozawa has made clear he wants to force Fukuda to step down or call a snap lower house poll by fanning public dissatisfaction with the leader and frustration over the political stalemate that is stymieing government policy.

Democratic Party officials said a censure motion would take aim at Fukuda’s introduction of a confusing national health insurance scheme that has outraged many elderly — long supporters of the ruling party — by forcing some aged 75 and over to pay more. The Democrats want to abolish the new system.

“Once this system took effect in April, the overwhelming view of the people has been that it is just too cruel,” Democratic Party executive Naoto Kan told a news conference.

The insurance row came close on the heels of the ruling bloc’s revival of a hefty and unpopular petrol tax used to fund roading projects that critics decried as wasteful.

But political analysts said the fall in Fukuda’s ratings may have bottomed out, helped by his performance on the diplomatic front after hosting a conference of African leaders and traveling to Europe this week to meet his G8 counterparts.

“We will see the end of the Diet session, and Democrats beating up on him will be off the front page,” said Gerry Curtis, a political science professor at Columbia University.

“We’ll have the run-up to the summit and lots of foreign policy, where he’s strong, and reassuring to the public,” he added. “My guess is that you can’t write off Fukuda.”

Kyodo quoted a top Democratic Party official as saying party executives had signed off on the decision to submit the censure motion, but that the timing and wording had yet to be decided.

An upper house resolution would have no legal clout, but it now appears more like an opposition maneuver to remind the public of what critics consider Fukuda’s faults.

“The political meaning of a censure motion is not only a matter for each party’s interpretation, but ultimately is a question of how the public views it,” the Democrats’ Kan said, noting Fukuda has never received a mandate from voters since no nationwide election has been held since he took office last year.

“We want to stress that the time has come for a snap election by taking advantage of the censure motion,” he said.

No general election need be held until September 2009 and the ruling bloc is wary of an early poll given the risk of losing its two-thirds majority that now enables it to override upper house vetoes in most matters.

“Probably there will be no election this year, and it is hard to change prime ministers,” said Keio University professor Yasunori Sone. “Of course, if his popularity sinks again, that’s a different story.”

— Reuters

Chinese, Japanese Power Dynamics

The roles of and interaction between the region’s major powers - China, Japan and the US -are likely to undergo significant change by 2020. The US’s military, entrepreneurial, economic, scientific and technological strengths should ensure it remains the predominant power in East Asia for some time, though its ability to translate its power into influence will depend on how skilfully it manages its wide array of regional relationships.

US security relationships in the region are likely to endure, though changes in the US forward presence, and in US and regional threat perceptions, may lead to a loosening of these ties.

China’s influence in East Asia will loom ever larger - whether it succeeds or fails. Between now and 2020, China is likely to develop even more into an economic and political centre of gravity, exercising a growing influence on the calculations of other states.

Growing Chinese influence will not require nor develop into a network of formal alliances. Its regional initiatives will increasingly be followed by others, and East Asian states will become more careful to avoid crossing its interests.

The US and China have strong incentives to avoid confrontation. Their relationship inevitably contains elements of competition. But China needs the US to remain strategically engaged in North Asia as a restraint on Japan’s military and nuclear development.

The US, in turn, looks to China to exert a restraining influence on North Korea. In the short term, shared economic interests are likely to outweigh economic frictions. But in the longer term, constructive economic relations will depend on the state of the wider political and security relationship.

Rising nationalism in China, and fears in the US of China as an emerging strategic competitor, could fuel an increasingly antagonistic relationship, with Taiwan the likeliest catalyst for crisis. Despite awareness of the risks in all three capitals, the potential for miscalculation will remain. A combination of factors, including China’s military capability developments and the 2008 Olympics, point to 2008-2010 as a particularly dangerous period.

China’s growing regional power and influence will pose a dilemma for Japan. Japan’s responses could include competition with China, drawing closer to Washington or attempting a more assertive regional role. A key determinant will be the nature of any final settlement on the Korean peninsula. Nevertheless, Japan’s will and capacity to play a larger role in the region will remain open to question.

All regional states want to avoid having to choose between the US and China. The US will remain important for economic and security reasons, and to forestall the possibility of Chinese hegemony. But accommodating China’s rising power will increasingly be their main pre-occupation.