Most Japan Stocks Fall; Topix Advances Most in Week Since 1992
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By Akiko Ikeda and Kotaro Tsunetomi
Dec. 4 (Bloomberg) -- Most Japanese stocks fell as an unexpected contraction in U.S. service industries raised concern the economic recovery is fragile and Takefuji Corp. plunged on speculation the consumer lender is short of funds.
Inpex Corp., Japan’s largest oil explorer, lost 2.1 percent, as crude prices dropped after the U.S. Institute for Supply Management’s index of non-manufacturing businesses missed the median economist estimate. Takefuji Corp. lost 9.4 percent after the Asahi newspaper said the lender is limiting loans because of a funding shortage. Canon Inc., the world’s largest camera maker and which gets about 80 percent of its revenue abroad, climbed 2.8 percent after the dollar strengthened against the yen.
About twice as many stocks declined as advanced on the Topix index, which added 0.2 percent to 889.58 at the 3 p.m. close in Tokyo. It had a weekly gain of 9.7 percent, the most since August 1992. The Nikkei 225 Stock Average rose 0.5 percent today to 10,022.59, its first close above 10,000 since Oct. 30.
“Investors are expecting sentiment to start improving,” said Masayuki Kubota, who oversees the equivalent of $1.7 billion in assets in Tokyo at Daiwa SB Investments Ltd. “Measures taken by the government and the central bank are supporting stocks.”
Japan’s main equity benchmarks both climbed every day this week, swelling the average price of companies in the Topix to 37 times estimated earnings, compared with 17 times for the Standard & Poor’s 500 Index in the U.S. and 16 times for the Dow Jones Stoxx 600 Index in Europe.
Dollar-Yen
For the year, the Topix has added 3.5 percent, the lowest return among equity benchmarks in the world’s 40 largest markets. Stocks have been dogged by concern a strengthening yen will erode the value of overseas earnings at Japanese companies and that the government will fail to revive economic growth.
“Everything depends on the U.S. dollar-yen rate,” said Diane Lin, a Sydney-based fund manager at Pengana Capital Ltd., which oversees about $1.1 billion. “We want to know if the Bank of Japan or the government will do something to increase liquidity and weaken the yen.”
The yen has averaged 93.84 against the dollar in 2009, the strongest since currencies began trading freely in 1971. The Japanese currency retreated to as low as 88.42 against the dollar today from a 14-year high of 84.83 last week.
Canon climbed 2.8 percent to 3,630 yen, and Fanuc Ltd., a maker of industrial robots which earns about 70 percent of its revenue outside Japan, added 2 percent to 7,790 yen as the currency weakened. Canon was the biggest contributor to the Topix’s gain, while Fanuc was the biggest boost to the Nikkei.
10 Trillion Yen
Japan’s equity benchmarks advanced this week as the yen weakened on speculation the Bank of Japan would take measures to limit the currency’s appreciation. The central bank announced a 10 trillion-yen ($113 billion) credit program on Dec. 1 amid government calls for it to combat falling prices.
Prime Minister Yukio Hatoyama is preparing his first stimulus package amid growing signs that the recovery in the world’s second-largest economy is losing momentum, Finance Ministry officials familiar with the matter said.
Takefuji plunged 9.4 percent to 386 yen after the Asahi newspaper said the consumer lender provided 1.5 billion yen in loans last month, less than its 10 billion yen monthly target. Acom Co. slumped 2.8 percent to 1,224 yen. Fifteen of 22 companies dropped in the Topix’s sub-index that includes consumer lenders.
Inpex lost 2.1 percent to 668,000 yen. Japan Petroleum Exploration Co., Japan’s second-biggest oil driller, declined 1.7 percent to 4,040 yen, its first drop in five days.
Crude oil for January delivery dropped as much as 1.1 percent to $75.61 a barrel in electronic trading in New York today. That extended a slump yesterday, when the Institute for Supply Management said its index of non-manufacturing businesses that make up almost 90 percent of the U.S. economy sank to 48.7 in November. That compared with economists’ estimate of 51.5. Fifty is the level that divides expansion from contraction.
“The weak economic indicator in the world’s biggest economy should spur a sell-off,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo.
To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Kotaro Tsunetomi at ktsunetomi@bloomberg.net.
Last Updated: December 4, 2009 03:42 EST
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