BS: Nikkei 225 Declines for Third Day This Week as Yen Strengthens
By Norie Kuboyama
April 22 (Bloomberg) -- Japan’s Nikkei 225 Stock Average fell for the third day this week as the strengthening yen hurt the profit outlook for exporters, fueling concern yesterday’s gains in equities were excessive.
Nintendo Co., a maker of video-game consoles and that gets 34 percent of its revenue in Europe, fell 1.8 percent after the yen strengthened as investors sought a refuge from the risk of a Greek debt default and tighter U.S. financial regulations. Sony Corp., an electronics maker that gets 71 percent of its sales outside Japan, lost 2.1 percent. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank by market value, fell 1.2 percent after the stock jumped yesterday by the most in three months.
The Nikkei 225 fell 1.3 percent to 10,949.09 at the 3 p.m. close in Tokyo, eroding yesterday’s 1.7 percent advance and heading to a third weekly drop. The broader Topix index retreated 0.9 percent to 978.17 today, with more than twice as many shares declining as advancing.
“The yen’s appreciation against the euro is the main reason for the feeling of anxiety in the market,” said Ayako Sera, a strategist at Tokyo-based Sumitomo Trust & Banking Co., which manages the equivalent of $300 billion. “The financial industry is concerned about how much the U.S. will tighten financial regulations. Any move against the free market is a negative factor for the economy.”
Companies in the Topix trade at 19.8 times estimated earnings on average, compared with 15.2 times for the Standard & Poor’s 500 Index in the U.S. and 13.1 times for the Stoxx Europe 600 Index.
Exports, Yen
The Topix index has risen 7.8 percent this year, the second- most among benchmarks for the world’s 15 largest equity indexes, as speculation Japanese exporters will benefit from a revival in the U.S. economy offset concern that China would step up policies to cool growth. Japanese exports rose for a fourth month in March, advancing 43.5 percent from a year earlier, the Finance Ministry said today.
Nintendo, the world’s biggest maker of video-game machines, slipped 1.8 percent to 30,750 yen. Sony fell 2.1 percent to 3,250 yen. Olympus Corp., an endoscope maker that counts Europe as its biggest export market, lost 1.9 percent to 2,847 yen. Nissan Motor Co., a carmaker that gets 77 percent of its revenue outside Japan, slumped 1.6 percent to 795 yen.
The yen strengthened against the world’s major currencies, reducing the value of overseas income at Japanese companies when converted into their home currency. The yen appreciated to as much as 124.06 today against the euro from 125.24 at yesterday’s 3 p.m. close of stock trading. It climbed to 92.74 against the dollar from 93.23.
U.S., Greece, China
U.S. President Barack Obama will call for new financial regulations at a speech today in New York, his spokesman said yesterday, boosting demand for Japan’s currency as a refuge from turmoil in the banking sector.
Mitsubishi UFJ Financial declined 1.2 percent to 508 yen and Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, slumped 0.9 percent to 3,270 yen. Banks were the heaviest drag on the Topix among the index’s 33 industry groups, followed by carmakers and electronics companies.
Futures on the Standard & Poor’s 500 Index fell 0.2 percent. The index dropped 0.1 percent in New York yesterday, as the International Monetary Fund called Greece’s fiscal crisis a “wake-up call” on sovereign-debt risks. The yield on Greece’s benchmark 10-year bond surpassed 8 percent, the highest in more than a decade.
“The prolonged concern about Greece’s debt is a headwind,” said Mitsushige Akino, who oversees the equivalent of $450 million in assets in Tokyo at Ichiyoshi Investment Management Co.
The International Monetary Fund said China should let the yuan gain to cool economic expansion, further weighing on stocks in the Asia-Pacific region. China’s growth will accelerate to 10 percent this year from 8.7 percent in 2009, according to the IMF, which raised its 2011 projection to 9.9 percent from 9.7 percent previously.
“China is waiting for good timing, and investors are closely watching the country’s actions,” Sera said.
--With assistance from Satoshi Kawano and Masaki Kondo in Tokyo. Editors: Nicolas Johnson, Sam Waite.
To contact the reporter for this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo skawano1@bloomberg.net.
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
