Bloomberg News

Japan Stocks Drop on Earnings; Yen Intervention Boosts Exporters

October 31, 2011

Oct. 31 (Bloomberg) -- Japanese stocks fell for the first day in three after companies from Mitsui O.S.K. Lines Ltd. to Fujifilm Holdings Corp. slashed forecasts. Declines were limited as exporters rallied after the government sold the yen to weaken the currency.

Mitsui O.S.K., Japan’s second-largest shipping company, sank 4.1 percent. Fujifilm, a Japanese maker of film and digital cameras, sank 2.3 percent. Canon Inc. and gamemaker Nintendo Co. led exporters higher after Japan intervened in the currency market to stem the yen’s rise to a post-World War II record.

“The currency plunged after the central bank and the government intervened and that helped to ease concern about worsening earnings,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.

The Nikkei 225 fell 0.7 percent to 8,988.39 at the 3 p.m. close in Tokyo. The broader Topix index sank 1 percent to 764.06. For the month, the gauge has added 0.4 percent, while the Standard & Poor’s 500 Index has surged 14 percent. Gains in Japanese stocks have been limited by the yen’s rise and flooding in Thailand, which has disrupted production for manufacturers including Toshiba Corp., TDK Corp., and Honda Motor Co.

Mitsui O.S.K. sank 4.1 percent to 308 yen today. The company forecast a 4 billion yen net loss this fiscal year amid declines in cargo rates and a delayed trade recovery. The shipper had predicted a 17 billion yen profit.

Shippers Drop

Nippon Yusen K.K., Japan’s biggest shipping line, retreated 2.4 percent to 201 yen after forecasting a full-year loss. Smaller Kawasaki Kisen Kaisha Ltd. fell 1.8 percent to 163 yen.

Shipping companies also fell after the Nikkei newspaper reported Mitsui O.S.K. and Nippon Yusen will cut some of their routes because of the global slowdown.

Fujifilm dropped 2.3 percent to 1,950 yen. The company slashed its full-year profit forecast 33 percent after the yen strengthened and the global economy slowed, damping demand.

Ebara Corp., a pumpmaker, tumbled 11 percent to 291 yen after cutting its full-year net-income forecast by 39 percent to 8 billion yen, citing a stronger yen.

Honda slid 3.7 percent to 2,406 yen. The automaker needs to replace equipment at its Thai factory because of flood damage, the Nikkei reported yesterday, without citing anyone.

Insurers also declined amid Thailand’s worst floods in more than 50 years. Japan’s casualty insurers may face about 190 billion yen ($2.4 billion) in net payouts to cover damages from the disaster, Deutsche Bank AG said in a report dated Oct. 26.

Thai floods

A measure of insurers had the biggest drop among the 33 Topix industry groups after surging 11 percent last week. T&D Holdings Inc. fell 4 percent to 788 yen, while Tokio Marine Holdings Inc., a provider of property and casualty insurance, fell 3.4 percent to 1,892 yen.

Investors are likely to sell to lock in profits after stocks surged last week, said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. The Topix jumped 3.7 percent in the five-day period ending Oct. 28, the biggest weekly gain since January 2010, after the U.S. economy grew at the fastest pace in a year and Europe made a breakthrough on a debt deal.

Exporters advanced today after the yen tumbled by the most in three years against the dollar after Japan acted in the foreign-exchange markets to weaken the currency. Canon, a camera maker that gets more than 80 percent of its revenue outside Japan, rose 1 percent to 3,600 yen. Nintendo increased 1.5 percent to 11,960 yen

“I’ve repeatedly said that we’ll take bold action against speculative moves in the market,” Japanese Finance Minister Jun Azumi told reporters today after the government sold the currency. “I’ll continue to intervene until I am satisfied.”

--With assistance from Yoshiaki Nohara in Tokyo. Editors: Jason Clenfield, Nick Gentle.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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