Japan’s Insurance Stocks Advance; Takefuji Slumps on Forecast

By Masaki Kondo

Feb. 16 (Bloomberg) -- Japan’s insurance and utility shares rose after the sharpest economic slowdown in more than three decades drove investors to safe-haven stocks. Takefuji Corp. paced declines among companies forecasting lower earnings.

Tokio Marine Holdings Inc., Japan’s biggest nonlife insurer, jumped 5.4 percent even after cutting its profit forecast by 88 percent as losses on securities swelled. Tokyo Gas Co., Japan’s largest natural-gas supplier, added 2.9 percent. Takefuji, Japan’s No. 3 consumer lender by value, plunged 7.9 percent after reversing its forecast to a full-year loss. Japan’s gross domestic product shrank at an annualized 12.7 percent rate in the three months to Dec. 31, the most since the 1974 oil shock.

The Topix index climbed 4.66, or 0.6 percent, to 769.25 as of 12:47 p.m. in Tokyo, with more than two stocks gaining for each that slumped on the gauge. The Nikkei 225 Stock Average lost 21.50, or 0.3 percent, to 7,757.90.

“Defensive shares are being bought in part because of the awful GDP number,” said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion. “It’s hard to bet on whether the global economy will start recovering later this year.”

Group of Seven finance ministers and central bankers will confront a “severe” economic downturn that will persist for most of 2009, they said after a meeting in Rome on Feb. 14. Gross domestic product fell for a third-straight quarter in the period ended Dec. 31, Japan’s Cabinet Office said today, as the global recession weighed on exports. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.

‘Awful’ Numbers

“The numbers today were pretty awful,” Ed Rogers, chief executive officer of Tokyo-based hedge fund adviser Rogers Investment Advisors Y.K., said in an interview with Bloomberg Television. Japan’s economic figures were “a reflection on not just the situation in Japan but the global situation.”

Tokio Marine climbed 5.4 percent to 2,255 yen, while Aioi Insurance Co. leapt 6.5 percent to 393 yen. Nipponkoa Insurance Co. added 3.8 percent to 730 yen. A gauge of insurance companies gained the most among 33 industry groups on the Topix.

“Third-quarter results did not present large negative surprise,” Makarim Salman, an analyst for Macquarie Group Ltd., wrote in a note on Japanese insurers dated today. “Dividends were maintained and earnings downgrades when they did occur were due to pre-flagged valuation losses.”

Defensive Shares

Tokyo Gas added 2.9 percent to 395 yen. Chubu Electric Power Co., Japan’s third-largest utility, added 2.8 percent to 2,385 yen. West Japan Railway Co., the nation’s third-largest rail operator, climbed 4.3 percent 362,000 yen. Insurers, utilities and railways are among so-called defensive companies, whose profits are relatively insulated against an economic slowdown.

Matsumotokiyoshi Holdings Co., Japan’s largest drugstore operator, soared 9.1 percent to 1,917 yen. The company’s net income jumped 32 percent to 5.7 billion yen ($62 million) in the nine months to Dec. 31, buoyed by efforts to trim costs on advertising, according to a filing with the exchange on Feb. 13.

Takefuji sank 7.9 percent to 582 yen. The company said on Feb. 13 it will have a net loss of 264.1 billion yen in the year ending March 31 as claims to return overpaid interest surged. It earlier forecast a yearly profit. Central Glass Co. slipped 5.5 percent to 310 yen after reversing its full-year forecast to a net loss.

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