Japanese Stocks Fall the Most in Two Weeks on Real-Estate, Euro
March 18, 2010, 4:28 AM EDTBy Masaki Kondo
March 18 (Bloomberg) -- Japanese stocks dropped the most in two weeks after Morgan Stanley lowered its view on the nation’s real-estate industry and the euro weakened against the yen.
Mitsui Fudosan Co. and Mitsubishi Estate Co., Japan’s largest property companies, sank more than 2 percent. Canon Inc., which counts Europe as its biggest market, lost 2.8 percent after the euro weakened following a Dow Jones report that Greece may seek financial aid from the International Monetary Fund. Kenedix Inc. gained 2.3 percent after saying it will invest 30 billion yen ($333 million) in Japanese properties this year.
The Nikkei 225 Stock Average fell 1 percent to close at 10,744.03 in Tokyo. The broader Topix index dropped 0.7 percent to 940.79, with twice as many shares declining as advancing. Both slumped the most since March 4.
“The fundamentals of the domestic economy aren’t good and consumption isn’t increasing,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $66 billion. “Businesses dependent on domestic demand are still in a challenging environment.”
The Topix index rallied 7.5 percent from a two-month low on Feb. 9 through yesterday after a lower-than-estimated increase in U.S. consumer prices eased concern the Federal Reserve would raise interest rates. The gain lifted the price of stocks in the index to 1.16 times book value, the highest level since Jan. 21, according to data compiled by Bloomberg.
The 25-day Toraku index, a measure of daily stock winners and losers in Tokyo, climbed to 129 yesterday, the highest level since June 26. A level of more than 120 suggests the market is overheating, according to Nomura Holdings Inc.
‘Lock in Profit’
“Technically, the market is overheating, so people are enticed to lock in profit,” Mitsushige Akino, who oversees the equivalent of $450 million at Tokyo-based Ichiyoshi Investment Management Co., said before markets opened.
Mitsui Fudosan fell 2.4 percent to 1,613 yen, and Mitsubishi Estate dropped 3.8 percent to 1,476 yen. Real-estate companies declined the most among Topix’s 33 industry groups, following nine days of gains.
Morgan Stanley lowered its view on the industry to “cautious” from “in-line” and cut Mitsui Fudosan and Mitsubishi Estate to “underweight” from “equal weight.”
Japanese companies with at least 1 billion yen in capital are pessimistic about the business climate, a survey by the Cabinet Office and Finance Ministry showed today. A gauge of companies’ sentiment stood at minus 2.4 for the three months to March 31, a second straight quarter of negative readings. A number less than zero means pessimists outnumber optimists.
Greece Concern
Canon, the world’s biggest maker of digital cameras, dropped 2.8 percent to 4,025 yen and was the heaviest drag on the Topix, followed by Toyota Motor Corp.
Nikon Corp., a camera maker that gets a fourth of its sales in Europe, lost 4.2 percent to 2,094 yen. Olympus Corp., an endoscope maker that counts Europe as its biggest export market, fell 2.3 percent to 2,830 yen.
The euro depreciated to 123.12 against the yen this afternoon from 124.86 at the 3 p.m. close of stock trading in Tokyo yesterday. A weaker euro reduces the value of European income for Japanese companies when converted into their home currency.
Greece, struggling to reduce its budget deficit, may seek financial aid from the IMF over the April 2 to April 4 Easter weekend, Dow Jones reported, citing a senior Greek official it didn’t name.
Kenedix, Japan’s biggest publicly traded real-estate asset manager, rose 2.3 percent to 28,340 yen, paring a gain of as much as 7 percent. The company is in talks with Korean pension funds and other investors to start a 10 billion-yen fund in the first half of this year, Kenedix President Atsushi Kawashima said in an interview yesterday. The second fund will start with about 20 billion yen by yearend, he said.
Toyota, the world’s largest carmaker, dropped 1.4 percent to 3,530 yen. The company said it’s reviewing complaints linked to electronic control units in Corolla and Matrix small cars sold in the U.S. that may cause the engine to shut down.
--Editors: Nicolas Johnson, Nick Gentle.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
