Bloomberg News

Topix Slips as Yen Strength Weighs on Exporters; Elpida Plunges to 7 Yen

February 29, 2012

Employees work in the trading pit at the Tokyo Stock Exchange in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Employees work in the trading pit at the Tokyo Stock Exchange in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Japan’s Topix Index (TPX) fell, reversing gains in the last hour of trading, after a sharp increase in the yen’s strength clouded the earnings outlook for exporters.

Toyota Motor Corp. and Sony Corp. (6758) dropped. Elpida (6665) Memory Inc., the chipmaker which this week filed Japan’s biggest bankruptcy in two years, plunged 97 percent after limits were removed on how much the stock could fall in a day. Fuji Electric Co. slid 4.5 percent after saying some of its money was managed by AIJ Investment Advisors Co., a firm that’s unable to account for clients’ money.

The Topix, Japan’s broadest equities index, slid 0.3 percent to 835.96 at the 3 p.m. close in Tokyo, ending a five- day winning streak. The Nikkei 225 Stock Average (NKY) was little changed at 9,723.24 after earlier rising as much as 1.5 percent.

“Exchange rates are bouncing around,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29.6 billion. “Investors won’t be able to buy more unless the yen takes a clear weakening direction.”

Sony, Japan’s biggest export of consumer electronics, finished the day down 2 percent at 1,737 yen, after rising as much as 1.4 percent. Toyota (7203), which relies on North America for about 30 percent of its sales, fell 0.9 percent to 3,355 yen.

The yen appreciated to as high as 80.26 against the dollar today in Tokyo. A stronger yen cuts the value of repatriated income for Japanese companies.

Overheating Signs

Shares gained early in the day even as technical indicators suggested the market was overbought after a rally that has boosted the Topix 15 percent this year. The 25-day Toraku (TORAKU) index, an indicator of market momentum, exceeded the 120 threshold that suggests the market may be poised to fall. The gauge has been above the level that indicates overheating for 13 days.

Oil companies declined after crude for April delivery fell 1.9 percent to $106.55 a barrel yesterday in New York, the biggest drop since Jan. 20. Inpex Corp. (1605), Japan’s biggest oil explorer, slid 0.9 percent to 577,000 yen. Japan Petroleum Exploration Co. lost 0.6 percent to 3,945 yen.

Elpida tumbled 97 percent to 7 yen after the Tokyo Stock Exchange removed bid and offer limits on the chipmaker’s shares, which are set to be delisted on March 28. Elpida filed for bankruptcy on Feb. 27.

Investing With AIJ

Fuji Electric dropped 4.5 percent to 211 yen. The maker of vending machines and factory equipment said yesterday it invested 9.3 billion yen with AIJ Investment Advisors, which regulators suspended on Feb. 24 after it couldn’t account for all of the money it managed for clients, sparking the biggest investigation in the history of the nation’s fund industry.

The Topix (TPX) has risen 6.3 percent since Feb. 14, when the Bank of Japan increased its bond purchases, weakening the yen. The value of stocks listed on the index has risen to 1.02 times book value, up from 0.88 in December, according to data compiled by Bloomberg. A number below 1 means companies can be bought for less than value of their assets.

Among stocks that rose today, Advantest Corp. (6857) gained 2.3 percent to 1,146 yen after Daiwa Securities Group Inc. lifted the investment rating for the maker of memory-chip testers to “outperform” from “neutral.” Chip-related companies also got a boost after the Philadelphia Semiconductor Index (SOX) gained 1.6 percent yesterday, the biggest rise since Feb. 16. Sumco Corp. added 1.5 percent to 874 yen.

-- With assistance from Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, Jim Powell.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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


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