Bloomberg News

Japan Stocks Fall Fifth Day on Stronger Yen, Greek Rescue

November 09, 2012

Japanese stocks fell, with the Nikkei 225 Stock Average capping its longest losing streak in nine weeks, after exporters declined on a stronger yen and amid concern Greece’s bailout will be delayed.

Brother Industries Ltd. (6448), an office-equipment maker that counts Europe as its biggest market, lost 2.5 percent. Sumitomo Rubber Industries Ltd. (5110) sank 6.7 percent after the tiremaker lowered its sales outlook. Nexon Co. (NKY) plunged 16 percent after the online-gaming company trimmed its forecast and was cut to underperform from buy at CLSA.

The Nikkei 225 fell 0.9 percent to 8,757.60 at the 3 p.m. close in Tokyo, declining a fifth day. The price of the gauge’s November options, also known as the “special quotation,” settled at 8,745.24. Volume on the gauge was more than 15 percent below the 30-day average. The broader Topix (TPX) Index lost 0.6 percent to 730.74, sliding 2.8 percent on the week.

The possibly delay in the Greek bailout “is reigniting concern the country may default and separate from the euro region,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($415 billion) in assets. “Investors are shying away from risk assets because of the European debt crisis and the U.S. fiscal cliff.”

The Topix has risen 1.6 percent since Sept. 6 after the European Central Bank started a global wave of stimulus to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the equity gauge traded at 0.9 times book value, compared with 2.1 for the S&P 500 and 1.5 for the Europe Stoxx 600 Index.

Fiscal Cliff

Futures on the Standard & Poor’s 500 Index added 0.4 percent today. The gauge fell 1.2 percent yesterday, capping its biggest two-day decline of the year. Stocks have tumbled since President Barack Obama’s re-election on concern he will be unable to reach a budget compromise to avoid the so-called fiscal cliff of automatic tax increases and spending cuts that threatens to drive the U.S. back into recession.

Euro-region finance ministers may not make a decision on unlocking 31.5 billion euros ($40.1 billion) in aid for Greece until late November as they await a full report on the country’s compliance with the terms of its bailout, said a European Union official who asked not to be named because the discussions are private.

The yen appreciated to as high as 101.03 against the euro today in Tokyo, compared with 101.89 at the close of stock trading yesterday. Against the dollar, Japan’s currency strengthened to 79.32 from 79.90. A stronger yen cuts overseas income at Japanese companies when repatriated.

‘Under Pressure’

“The yen is under pressure because investors are being cautious about the prospects of even more stimulus from the U.S. if it falls off the fiscal cliff,” Sumitomo Mitsui Trust Bank’s Sera said.

Brother Industries, which gets 28 percent of its sales in Europe, slipped 2.5 percent to 717 yen. Nikon Corp., a camera maker that gets 24 percent of its sales in North America, slumped 1.3 percent to 1,878 yen.

In China, the Communist Party yesterday started a weeklong meeting to choose its fifth generation of leaders. Data today showed the nation’s industrial production and retail sales exceeded economists’ estimates. Inflation unexpectedly decelerated to a 33-month low, signaling the government is supporting growth without driving a rebound in prices.

Some 551 of the 1,675 Topix companies post earnings results this week. Of the 341 companies on the gauge which have reported quarterly revenue since Oct. 1 and for which Bloomberg News has estimates, 65 percent have missed projections.

Earnings Forecasts

Sumitomo Rubber tumbled 6.7 percent to 868 yen after cutting its sales forecast 1.4 percent to 705 billion yen in the year ending Dec. 31 on slumping overseas demand. The stock’s investment rating was trimmed to outperform from buy at CLSA.

Nexon (3659) tumbled 16 percent to 766 yen after the gamemaker lowered its full-year net-income forecast to between 28.9 billion yen and 31 billion yen from an earlier 32.7 billion yen. The company said it adjusted its outlook due to exchange rates and its 36.5 billion yen acquisition of mobile-game designer Gloops Inc. last month.

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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