Japan’s Retail Stocks Fall on Unemployment; Shipping Lines Gain

By Jason Clenfield and Masaki Kondo

May 29 (Bloomberg) -- Japanese retailer shares fell as employment and household spending worsened, overshadowing an increase in factory production. Resource and shipping stocks gained after oil hit a six-month high and transport rates surged.

Yamada Denki Co., Japan’s biggest electronics retailer, lost 3.2 percent. Aiful Corp. lost 3.2 percent after Moody’s Investors Service cut the consumer lender’s debt rating. Inpex Corp., Japan’s No. 1 oil explorer, gained 6.6 percent, while Mitsui O.S.K. Lines Ltd., the world’s largest merchant fleet operator, added 4.5 percent.

The Nikkei 225 Stock Average drifted between gains and losses, and was up 12.8, or 0.1 percent, to 9,464.19 at 12:44 p.m. in Tokyo. The broader Topix index dipped 1.24, or 0.1 percent, to 894.35, with two stocks falling for each that advanced. On the week, the Nikkei headed for a 2.6 percent increase, while the Topix added 2.1 percent.

“Companies that have drawn down inventories too fast will be replenishing through June, but the job market suggests they won’t be adding to their stockpiles,” said Akio Yoshino, chief economist at Societe Generale Asset Management (Japan) Co., which oversees about $25 Billion. “As long as investors stay bullish on China, people will expect shipping volumes to rise. That should boost rates.”

The Topix is poised to add 6.7 percent in May for a third- straight monthly gain, the longest stretch since the three months ended June 2007. Companies on the gauge traded at 1.15 times book value yesterday, the highest level since Oct. 6.

Jobless Rate

Yamada Denki lost 3.2 percent to 5,410 yen after the government statistics bureau said Japan’s jobless rate rose to a five-year high of 5 percent in April, and household spending fell for a 14th month. Aeon Co., Japan’s largest general merchandise retailer, fell 0.9 percent to 878 yen.

A separate report from the Trade Ministry showed industrial production advanced 5.2 percent in April from the previous month, while economists had estimated a 3.3 percent increase. That was the fastest increase in 56 years.

The production report prompted the yen to rise from a two- week low against the dollar on speculation funds will flow into the nation’s assets. Major exporters gave up gains as the stronger yen diminished the value of overseas sales. Honda Motor Corp. fell 1.3 percent, reversing an early 0.5 percent advance. Canon Inc. fell 1.2 percent.

Toshiba Corp. added 2.6 percent to 357 yen after public broadcaster NHK said Japan’s biggest chipmaker will raise output of flash-memory chips as demand recovers. That would reverse a production cut in January.

Debt Rating

Aiful lost 3.2 percent, after Moody’s yesterday cut the company’s long-term debt rating two levels to non-investment grade. Moody’s also said it’s considering downgrading rival Takefuji Corp. to junk level. Takefuji slumped 2.8 percent to 557 yen.

Inpex Corp. gained 6.8 percent to 774,000 yen, while rival Japan Petroleum Exploration Co. climbed 8.9 percent to 4,870 yen. Crude rose to a six-month high yesterday after The Organization of Petroleum Exporting Countries decided to leave production quotas unchanged. Oil for July delivery rose to $65.08 a barrel in New York, the highest settlement since Nov. 5.

Mitsui O.S.K. added 4.5 percent to 672 yen, after the Baltic Dry Index, a measure of commodity-shipping fees, climbed for a 19th day to an eight-month high. Rival Nippon Yusen K.K. rose 4.2 percent to 451 yen.

To contact the reporters for this story: Jason Clenfield in Tokyo at Jclenfield@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.