Bloomberg News

Japan Stocks Fall Sixth Day Before BOJ Policy Decision

July 11, 2012

July 12 (Bloomberg) -- Japanese stocks fell for a sixth day, with the Nikkei 225 Stock Average (NKY) extending its longest losing streak since April, on speculation the Bank of Japan will refrain from boosting stimulus at its policy meeting today.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, fell 1.6 percent. Asahi Glass Co. dropped 6.6 percent after cutting its operating profit forecast. Tokyo Electric headed toward a record low on a report its reactor cleanup will cost 1 trillion yen ($12.6 billion). Best Denki Co. surged 15 percent on a report Yamada Denki Co. will acquire the electronics retailer.

The Nikkei 225 Stock Average fell 1 percent to 8,765.38 at the 11:30 a.m. trading break in Tokyo. Trading volume on the Nikkei was 5 percent above the 30-day average. The broader Topix Index lost 0.9 percent to 750.15, with about three stocks falling for each that rose.

“When you look at domestic economic conditions, you see few reasons to expect a move out of the BOJ,” said Takahiro Nakano, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Yet there are still lingering expectations for more easing this time. The market hasn’t reached its consensus, and that’s why people are wavering.”

The Topix rebounded about 8 percent since June 4, when it closed at its lowest since 1983, after euro leaders agreed to ease bailouts for lenders and on optimism central banks around the world will ease policy.

The gain has boosted the average price of shares on the Japanese gauge to 0.9 times book value, compared with 2.1 times for the Standard & Poor’s 500 Index and 1.4 times for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.

Stimulus Hints

Futures on the Standard & Poor’s 500 Index (SPXL1) slid 0.1 percent today. The equity gauge closed little changed in New York yesterday, erasing losses in the final hour of trading as investors sifted through minutes of a Federal Reserve meeting for hints of additional stimulus.

Ten of 17 analysts surveyed by Bloomberg News expect no change to the Bank of Japan’s monetary policy today after sentiment among large manufacturers improved last quarter, according to the Tankan survey released last week.

The Nikkei 225 Volatility Index (VNKY) rose 5.5 percent to 19.84, indicating traders expect a swing of about 5.7 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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