Japanese Stocks Decline in Longest Losing Streak Since October

By Patrick Rial

July 6 (Bloomberg) -- Japanese stocks declined for a fourth day, the longest losing streak since October, as shipping rates slumped and a rising yen dimmed earnings prospects for exporters.

Mitsui O.S.K. Lines Ltd., Japan’s second-biggest shipping line by sales, retreated 4.4 percent after a measure of bulk cargo rates slid 4.1 percent, the most since June 8. Rohm Co., which makes customized semiconductors and gets half its sales from overseas, lost 3.4 percent. Dena Co. jumped 9 percent after the mobile phone content provider said it will acquire a Chinese social networking site.

The Nikkei 225 Stock Average declined 135.20, or 1.4 percent, to 9,680.87 at the close of trading in Tokyo. The broader Topix index lost 0.9 percent to 912.42. The Nikkei 225 soared as much as 41 percent after touching a quarter-century low on March 12. Since June 12, the benchmark has lost 4.5 percent.

“It’s healthy and natural to see the markets correct after a big run-up, because if we don’t get that then bubbles will form,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion. “The economies of the U.S. and Europe are in bad shape, as is Japan’s. About the only one that is showing strength is China.”

Trading volume was light as the U.S. market was closed on July 3 for the Independence Day holiday. Only 1.64 billion shares changed hands, the fifth-lowest level this year.

U.S. Vice President Joe Biden said on the ABC News program “This Week” the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus program.

S&P Earnings

Profit at companies included in the Standard & Poor’s 500 Index may continue to slide in the quarter that began last week. Analysts see a 21 percent drop in year-over-year profits, according to data compiled by Bloomberg.

Earnings declines are also evident among Japan’s retailers, which have begun reporting first-quarter results. Daiei Inc. lost 1.6 percent to 426 yen after posting a net loss of 1.25 billion yen for last quarter on weak clothing sales. Nissen Holdings Co. plunged 9.5 percent to 344 yen, set for its lowest close since February 2002. The mail-order business operator slashed its full-year net income forecast by 85 percent.

Mitsui O.S.K. lost 4.4 percent to 567 yen. Nippon Yusen K.K., the largest shipper by sales, dropped 3.4 percent to 396 yen. The Baltic Dry Index, a gauge of cargo rates, had a loss for two straight weeks amid mounting concern China’s demand for commodities such as iron ore will slow. The index has tumbled 18 percent in the last month.

Inpex Corp., Japan’s biggest oil explorer, retreated 3 percent to 713,000 yen. Mitsui & Co., Japan’s second-largest trading company, which gets more than half its earnings from commodities, tumbled 3.1 percent to 1,083 yen.

Dena Climbs

Crude oil fell 2.6 percent today, while a measure of six metals traded on the London Metal Exchange, including copper and zinc, declined 1.3 percent on July 3.

Rohm slumped 3.4 percent to 6,850 yen. Mazda Motor Corp., Japan’s fifth-largest automaker, lost 2.9 percent to 235 yen. Kubota Corp., the nation’s top maker of agricultural machinery, fell 3 percent to 783 yen.

The yen climbed to as high as 95.24 versus the dollar today, compared with 96.09 at the close of the stock market on July 3. The stronger yen reduces the value of repatriated sales for Japanese exporters.

Dena surged 9 percent to 341,000 yen, the steepest rally since April 23. The company said on July 3 it will make Waptx Ltd., China’s largest mobile social networking service, into a subsidiary.

Chemical producer Denki Kagaku Kogyo K.K. jumped 5.2 percent to 284 yen. Yu Okazaki, an analyst at Nomura, raised the stock to “buy” from “neutral” in a report dated today. Prices for styrene monomer, a chemical used in the production of auto parts, remain strong and the company has growth prospects in medical and electronics chemicals, the analyst wrote.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.