Bloomberg News

Japanese Stock Futures Gain on U.S. Confidence, Spending

April 03, 2012

Japanese stocks declined, sending the Topix (TPX) Index to a three-week low, after the yen’s rise to its highest in three weeks against the dollar overshadowed stronger- than-forecast growth in U.S. manufacturing.

Kyocera Corp. (6971), an electronic components maker that gets more than half of its sales outside Japan, lost 1.1 percent. Mitsubishi Estate Co. sank 3.1 percent after the property company surged 26 percent this year through yesterday. Mitsui Chemicals Inc. (4183) gained 3.3 percent after Jefferies Group Inc. raised its rating to “buy.”

The strengthening yen “drags down shares as it has the greatest impact on manufacturers’ earnings,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of $22 billion.

The Topix slid 0.6 percent to 851.02 at 3 p.m. in Tokyo, its lowest close since March 13, with almost three times as many shares declining as advancing. The Nikkei 225 Stock Average (NKY) fell 0.6 percent to 10,050.39, with trading volume on the gauge more than 30 percent lower than the 30-day average.

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The gauge gained 0.8 percent in New York yesterday after manufacturing in the U.S. expanded at a faster pace than forecast in March, a sign that industry is weathering slower global growth.

The yen reached as high as 81.56 against the dollar today, compared with 83.05 at the close of stock trading yesterday. Japan’s currency strengthened to 108.70 against the euro this morning from 110.76. A stronger yen cuts overseas income at Japanese companies when repatriated.

Kyocera fell 1.1 percent to 7,540 yen. Mazda Motor Corp., a carmaker that gets more than 75 percent of its revenue overseas, lost 2.1 percent to 143 yen.

Money Supply Falls

Stocks also dropped after the Bank of Japan’s liquidity supply dropped in March for the first time in more than three years, fueling complaints that the central bank should be doing more to end deflation. The monetary base fell 0.2 percent in March after climbing 11.3 percent from a year earlier in the previous month, a BOJ report showed today.

‘Investors are beginning to doubt the BOJ will continue to ease monetary policy and are unsure it will promote reflation,” Toyota Asset’s Hamasaki said.

The Topix (TPX) has risen 8.2 percent since Feb. 14, when the central bank increased its bond purchases, weakening the yen. The value of stocks listed on the index has risen to 1.05 times book value, up from 0.88 in December, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.

Developers Drop

Developers (TPX) declined the most among the 33 Topix industry groups after gaining the most on the equity gauge in the last month. Mitsubishi Estate sank 3.1 percent to 1,448 yen. Mitsui Fudosan Co., which has risen by a third this year, slid 2.3 percent to 1,558 yen.

“From the beginning of this year, developers gained quite a lot, so I think investors are selling the shares to lock in profit,” said Masahiro Mochizuki, a Tokyo-based analyst at Credit Suisse Group AG.

Mitsui Chemicals gained the most in the Nikkei 225, rising 3.3 percent to 252 yen. The stock rose after Jefferies boosted its investment rating to “buy” from “underperform,” citing petrochemical companies’ favorable inventory cycle and rising product prices.

Citizen Holdings Co. added 1.8 percent to 521 yen after JPMorgan Chase & Co. raised its stock price estimate to 620 yen from 600 yen, saying the watch business will likely continue to grow.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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


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