Bloomberg News

Japanese Shares Decline as Yen Rises on Euro Concern, BOJ

March 22, 2013

Japan shares fell, with the Nikkei 225 Stock Average posting its biggest weekly decline since November, as the yen rose after Cyprus’ bailout request was rejected by Russia and new Bank of Japan (8301) Governor Haruhiko Kuroda failed to announce fresh stimulus.

Toyota Motor Corp. (7203), the world’s largest carmaker, dropped 2.2 percent. Nippon Sheet Glass Co., which counts Europe as its biggest market, fell 2.7 percent. Seven & I Holdings Co. slumped 4 percent on a Nikkei newspaper report that the convenience- store operator may miss its operating profit forecast. Broadleaf Co., a software developer, surged 37 percent on its market debut.

The Nikkei 225 fell 2.4 percent to 12,338.53 at the close in Tokyo, declining 1.8 percent on the week, its biggest weekly drop since the period ended Nov. 9. The Topix Index slid 1.9 percent to 1,038.57, with all 33 industry groups declining.

“Investors’ sense of caution is increasing because of the Cyprus problem, and we’re in a risk-off atmosphere,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which manages about $163 billion. “Kuroda didn’t announce anything concrete and the market was a little bit ahead of itself in terms of its expectations.”

The Topix rallied 46 percent through yesterday from Nov. 14, when elections were announced that brought Prime Minister Shinzo Abe to power on a platform of increased stimulus and monetary easing from the central bank. The gauge is trading at 1.2 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

U.S. Futures

Kuroda, speaking yesterday in his first press conference, restated that he will do whatever it takes to achieve a 2 percent inflation target and that he may bring forward open- ended asset purchases. He declined to comment on whether he will call an emergency meeting before the April 3-4 policy gathering.

Futures on the S&P 500 lost 0.1 percent today. The gauge yesterday lost 0.8 percent as European debt concerns outweighed better-than-estimated American economic data.

Cyprus failed to secure a bailout after Russia rebuffed the request for funding, Cyprus’s Finance Minister Michael Sarris said. The euro region’s third-smallest economy is trying to find emergency financing after lawmakers rejected an unprecedented bank deposit levy as a condition for a rescue.

The yen traded at 94.71 today, compared with as weak as 96.11 yesterday. A stronger yen cuts the overseas earnings outlook for Japanese exporters (TPX) when repatriated.

Exporters were the biggest drag on the Topix today. Toyota dropped 2.2 percent to 4,880 yen. Panasonic Co., a consumer- electronics maker that gets nearly half its sales overseas, slumped 2.6 percent to 676 yen.

Seven & I

Seven & I dropped 4 percent to 2,952 yen, its biggest decline since October. The 7-Eleven operator will post operating profit of 296 billion yen, the Nikkei reported, less than the company’s forecast of 308 billion yen and analysts’ average estimate of 300 billion yen.

Broadleaf surged to 1,480 yen on its trading debut, 37 percent above its 1,080 yen initial public offering price.

The Nikkei Stock Average Volatility Index rose 14 percent to 27.49 today, indicating traders expect a swing of about 7.9 percent on the benchmark gauge over the next 30 days. Volume on the gauge was 33 percent lower than its 30-day average.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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


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