Bloomberg News

Japanese Stocks Fall on Growth Concern Before ECB Meeting

September 05, 2012

Japan stocks declined a fifth day, the longest losing streak in two months, as economic reports from the U.S. and China added to signs global growth is slowing ahead of tomorrow’s European Central Bank meeting.

Nissan Motor Co., Japan’s second-largest automaker, dropped 1.9 percent as its vehicle sales in the U.S. missed estimates. Komatsu Ltd., a maker of construction equipment that gets about 14 percent of its sales from China, slid 3.5 percent on a report mainland industrial output may slow. Chubu Electric Power Co. (9502) rose 2.4 percent to lead gains on the Nikkei 225 (NKY) Stock Average after forecasting a narrower first-half loss.

The Nikkei 225 lost 1.1 percent to 8,679.82 at 3 p.m. in Tokyo, closing at the lowest level since Aug. 3. The five-day decline was the longest losing streak since July. The broader Topix Index slid 1.2 percent to 718.09 today. The ECB’s Governing Council is due to decide tomorrow on President Mario Draghi’s bond-buying proposal, which he says is necessary to ensure the monetary bloc’s survival.

“The macro backdrop is quite challenging and growth conditions are fragile obviously,” said Nader Naeimi, Sydney- based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The market is getting nervous about going into the ECB meeting. There’s a lot of speculation on the ECB about what they will do.”

The Topix dropped 18 percent from this year’s peak on March 27 on concern Europe’s debt crisis is deepening and growth is slowing in China and the U.S. The gauge trades at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index. A number less than one means companies can be bought for less than the value of their assets.

U.S. Manufacturing

Futures on the S&P 500 slid 0.4 percent today. The gauge fell 0.1 percent yesterday after Institute for Supply Management’s U.S. data showed U.S. manufacturing shrank for a third month in August, the longest decline since the recession ended in 2009.

Exporters to the U.S. declined. Canon Inc. (7751), a camera maker that gets 27 percent of sales from the U.S., lost 3.9 percent to 2,463 yen. Sony Corp., Japan’s biggest exporter of consumer electronics, slipped 3 percent to 863 yen.

Nissan Motor dropped 1.9 percent to 722 yen. The automaker’s deliveries in the U.S. increased 7.6 percent last month, according to researcher Autodata Corp., short of the 12 percent average estimate in a Bloomberg survey.

Companies that do business in China fell on signs of a deepening slowdown. Komatsu dropped 3.5 percent to 1,475 yen. Fanuc Corp., a maker of industrial robots, slipped 2 percent to 12,550.

China Outlook

The nation’s growth in industrial output may slow to about 10 percent this year from 13.9 percent last year and 15.7 percent in 2010, the Securities Times newspaper reported today, citing a joint report by the Ministry of Industry and Information Technology and the Chinese Academy of Social Sciences. Adding to signs of slowdown, China’s services industries expanded at a weaker pace in August, according to a survey released by HSBC Holdings Plc and Markit Economics today.

Among stocks that rose, Chubu Electric gained 2.4 percent to 909 yen. The utility said it expected its first-half loss to narrow 79 percent to 4 billion yen.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; 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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