By Masaki Kondo
Aug. 19 (Bloomberg) -- Japan’s benchmark stock indexes extended this week’s declines to their lowest levels this month on concern share prices had risen too high given the outlook for earnings growth.
Kawasaki Kisen Kaisha Ltd., a shipping line that forecast a loss last month, fell 2.3 percent after transport rates dropped. Tokio Marine Holdings Inc., Japan’s biggest listed insurer, sank 2 percent after regulators said new guidelines may cut solvency ratios. Sony Corp., expecting a second year of losses, sank 3.9 percent after cutting the price of its PlayStation 3 game player.
The Nikkei 225 Stock Average drifted between gains and losses at least 10 times before finishing down 80.96, or 0.8 percent, at 10,204.00 in Tokyo. The broader Topix index fell 6.41, or 0.7 percent, to 943.25. Both gauges sank to a level not seen since July 30.
“Equities are not cheap relative to their earnings prospects and people are feeling the recent rally has been stretched to its limit,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees the equivalent of $3.7 billion.
The Nikkei surged 46 percent from a 26-year low on March 10 through yesterday as government spending boosted production and corporate earnings. The rally lifted companies in the gauge to 41 times estimated net income, from as low as 9.5 times last year, according to Nikkei Inc., which compiles the gauge.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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