Japan Stocks Fall, Led by Automakers on Yen; Banks Advance

By Masaki Kondo

Jan. 22 (Bloomberg) -- Japanese stocks fell, reversing early gains, as the stronger yen and a record drop in exports clouded the profit outlook for makers of cars and electronics.

Honda Motor Co., which gets more than half of its profit from North America, lost 4.8 percent, while market leader Toyota Motor Corp. slumped 3.2 percent. Sony Corp., the No. 2 electronics maker globally, lost 3.3 percent. Daiwa Securities Group Inc. jumped 5.5 percent as speculation grew the Bank of Japan will act to ease a credit shortage and Credit Suisse Group raised Japan’s securities industry.

The Nikkei 225 Stock Average declined 39.31, or 0.5 percent, to 7,862.33 as of 10 a.m. in Tokyo. The broader Topix index fell 1.40, or 0.2 percent, to 785.75, with almost the same number of shares falling and rising.

“There’s a tug-of-war between expectations for Obama’s stimulus measures and pessimism about the worsening global economy,” Mitsushige Akino, who oversees the equivalent of $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television. “The market is held in this very tenuous balance.”

The Nikkei plunged by a record 42 percent last year as credit losses and asset writedowns have amounted to more than $1 trillion at global financial companies. Japan’s exports tumbled 35 percent in December from a year earlier, the most on record, the Finance Ministry said today, pointing to wider losses and more job cuts among Japanese manufacturers.

Stronger Yen

The Japanese currency appreciated against the dollar to 88.79 today from 89.88 at the close of stock trading yesterday. The yen strengthened to as much as 87.13 yesterday, a level not seen since July 1995. A stronger local currency reduces the value of overseas sales for Japanese companies.

Honda sank 4.8 percent to 1,985 yen, and Toyota slid 3.2 percent to 2,885 yen. Mazda Motor Corp., which exports 80 percent of domestic production, dived 4.6 percent to 145 yen after KBC Securities cut it to “negative” from “neutral.” Automakers posted the sharpest decline among 33 industry groups on the Topix.

Sony lost 3.2 percent to 1,926 yen. The company said today it’s considering stopping production at one of its two television factories in Japan to cut costs. Sharp Corp., Japan’s largest maker of liquid-crystal display television, lost 2.2 percent to 714 yen, reversing a gain of as much as 1.8 percent.

Daiwa, Japan’s second-biggest brokerage, jumped 5.5 percent to 478 yen, while Nomura Holdings Inc., the largest, gained 5.1 percent to 644 yen. Credit Suisse Group boosted its rating on Japan’s securities industry to “overweight” from “market weight,” saying the sector will rebound.

The Bank of Japan is scheduled to conclude its two-day meeting today. Governor Masaaki Shirakawa and his colleagues may pledge purchases of corporate bonds and other types of securities from banks to help businesses raise funds, according to economists.

Obama Plan

Mizuho Financial Group Inc., Japan’s No. 2 listed bank, jumped 4.2 percent to 226 yen, and market leader Mitsubishi UFJ Financial Group Inc. added 2.7 percent to 496 yen. Shinsei Bank Ltd., part-owned by private equity investor Christopher Flowers, rose 3.5 percent to 117 yen. Banks were the biggest contributors to the Topix’s gain.

U.S. President Barack Obama’s economic package is likely to include fresh injections of capital into banks and will deal with toxic assets clogging lenders’ balance sheets, people familiar with the deliberations said. Treasury Secretary-nominee Timothy Geithner yesterday told Congress that Obama will propose a “comprehensive plan” within the next few weeks for responding to the economic and financial crises.

Nikkei futures expiring in March edged up 0.1 percent to 7,880 in Osaka and gained 0.2 percent to 7,885 in Singapore.

--Motoko Kakizaki and Yuichi Kato in Tokyo. Editors: Rocky Swift, Nicolas Johnson

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.