Japan Stocks Swing Between Gains, Losses on U.S. Economy Concern
May 30, 2011, 2:56 AM EDTBy Shani Raja and Satoshi Kawano
May 30 (Bloomberg) -- Japanese stocks swung between gains and losses amid speculation shares are oversold, and as comments by the Group of Eight nations tempered concern that a U.S. economic recovery is slowing.
Sony Corp., the maker of Bravia televisions, fell 2.1 percent after a report showed U.S. home-buying plunged more than forecast and the yen advanced against the dollar. Honda Motor Co., Japan’s No. 2 automaker, dropped 1.3 percent after hackers accessed personal data of customers in Canada. Sumitomo Realty & Development Co., Japan’s third-biggest developer, rallied 1.2 percent after being raised to “overweight” from “equal- weight” at Barclays Capital.
The Nikkei 225 Stock Average fell 0.2 percent to 9,504.97 at the 3 p.m. close of trading in Tokyo, extending a third weekly drop. The broader Topix index slipped 0.2 percent to 823.68, with about four stocks advancing for every three that declined.
“While there’s concern about data showing weakness in the U.S. economy it’s not as if the recovery is stalling outright,” said Hiroshi Fujimoto, a fund manager at Tokyo-based Shinkin Asset Management Co., which oversees the equivalent of $3.9 billion. “Investors are pretty comfortable with the current price level. When stocks rise, you get selling, and on the other hand, people are buying on the dips.”
Tsunami, Earthquake Damage
The Topix has lost about 12 percent since the magnitude-9 earthquake and tsunami on March 11 that devastated Japan’s northeast coast, crippling a nuclear power plant and disrupting supply chains at companies from Toyota Motor Corp. to chipmaker Renesas Electric Corp.
Companies in the Topix traded at an average 0.94 times estimated book value. A price-to-book value below one means that investors can theoretically buy companies for less than the value of their assets.
“With the price-to-book ratio below one, stocks are clearly cheap,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc.
Sony dropped 2.1 percent to 2,122 yen after the Japanese currency appreciated to as much as 80.72 against the dollar, compared with 81.07 at the close of stock trading in Tokyo on May 27. Toyota, the world’s biggest carmaker, lost 0.2 percent to 3,330 yen. A stronger yen erodes the value of overseas sales when repatriated.
Honda fell 1.3 percent to 3,030. The company last week said the personal data of about 280,000 customers in Canada was accessed by hackers. Separately, the automaker abandoned a plan for a share buyback as its business prospects are unclear because of the March 11 earthquake, the Nikkei newspaper reported, without saying where it obtained the information.
Profit Decline
Pacific Metals Co., Japan’s top ferro-nickel producer, slumped 4 percent to 554 yen after forecasting a drop in net income. The company predicted profit will decline by three quarters to 2.78 billion yen this fiscal year on plunging sales.
Stocks found support after the G-8 said on May 27 the global recovery “is becoming more self-sustained,” in a statement following a two-day summit in Deauville, France. A report the same day showed U.S. home buying plunged more than forecast in April, a sign the industry that triggered the recession continues to struggle.
Employers probably hired fewer workers in May and manufacturing cooled as the jump in fuel costs and the effects of Japan’s earthquake rippled through the U.S., economists said before reports this week, adding to signs the recovery in the world’s biggest economy may be slowing.
Among stocks that rose today, Sumitomo Realty gained 1.2 percent to 1,710 yen. Senshu Ikeda Holdings Inc., a lender, jumped 3.9 percent to 107 yen after the company said it will spend 31.2 billion yen to repurchase shares.
--With assistance from Akiko Ikeda in Tokyo. Editors: Jason Clenfield, Sam Waite.
Contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net. Satoshi Kawano in Tokyo at Skawano1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
