By Akiko Ikeda and Patrick Rial
Oct. 28 (Bloomberg) -- Japanese stocks fell for a second day as companies from ship operators to electronics makers reported weaker earnings or cut forecasts.
Leopalace21 Corp. plunged 16 percent after the real-estate company predicted a loss from a profit. Kawasaki Kisen Kaisha Ltd. dropped 4.5 percent, leading declines by shipping lines after widening its loss forecast yesterday. Canon Inc., the world’s largest camera maker, sank 3.4 percent after reporting a seventh-straight quarterly profit decline. Toshiba Corp. lost 4.6 percent after maintaining its full-year estimates while saying the outlook for the global economy is “highly opaque.”
“The thought is starting to creep into people’s minds that once stimulus measures run out, the recoil will run rather deep,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion. “Earnings might be good now, but that’s looking to the past, and everyone is more worried about the uncertain future.”
The Nikkei 225 Stock Average fell 1.4 percent to 10,075.05 at the market close in Tokyo. The broader Topix index dropped 0.8 percent to 888.80, with almost twice as many shares declining as advancing. Stocks in the benchmark are valued at 37 times estimated earnings, compared with 17 times for the Standard & Poor’s 500 Index.
Shimano Inc., the world’s biggest maker of bicycle parts, retreated 6.9 percent to 3,660 yen, the sharpest decline this year. The company cut its full-year net income forecast 28 percent due to a slump in sales of bikes and fishing equipment. Net income fell 58 percent for the nine months ended Sept. 30.
Leopalace21 Plunges
Leopalace21 plunged by the daily limit of 16 percent to 528 yen after forecasting a net loss of 19.1 billion yen, compared with its earlier projection for 8.7 billion yen in net income. The company cited a slow recovery in the rental market, low occupancy rates and a writedown.
Property stocks climbed the most among the Topix’s 33 industry groups in the fiscal first half to September, gaining 37 percent, compared with 18 percent for the broad benchmark.
“Real-estate stocks advanced during the first half because of expectations for their condominium and rental-office businesses, however none of them is improving,” said Masaru Kimura, an analyst at Cosmo Securities Co. “Tighter restrictions on banks’ equity capital and a rise in long-term interest rates are also negative factors for the stocks.”
Leopalace tumbled the most among the 1,687 companies in the Topix today. Real-estate companies had the largest decline among the index’s 33 industry groups, followed by shipping lines.
Shipping Lines Decline
Ship operators extended declines from yesterday, when they reported earnings and forecasts. Kawasaki Kisen tumbled 4.5 percent to 337 yen. The company widened its annual net forecast loss to 79 billion yen ($858 million) from 31 billion yen.
Nippon Yusen K.K., Japan’s largest line by sales, retreated 2.6 percent to 338 yen, its lowest since September 2001, after the company cut fleet spending plans by half and widened its loss forecast fivefold. Mitsui O.S.K. Lines Ltd. dropped 2.2 percent to 539 yen.
Among stocks that climbed, Honda Motor Co., Japan’s second- largest carmaker, rallied 3.3 percent to 2,940 yen after boosting its full-year profit forecast to 155 billion yen, compared with an earlier projection of 55 billion yen. The company cited government stimulus measures that are lifting demand for fuel-efficient vehicles in China and Japan.
Honda had the steepest increase in the Nikkei and was the biggest positive contributor to the Topix.
Koito Manufacturing Co., a headlamp maker, climbed 4.3 percent to 1,315 yen after increasing its full-year net income outlook to 6 billion yen from 1 billion yen, from rising demand for less-polluting cars.
DeNA, Canon, Toshiba
DeNA Co. jumped by the daily limit of 16 percent to 285,200 yen, the sharpest advance in the Topix. Hiroshi Kamide, an analyst at KBC Securities, lifted the operator of auction and shopping Web sites to “buy” from “hold,” citing management’s re-focus on gaming contents.
Toshiba, Japan’s biggest chipmaker, lost 4.6 percent to 519 yen, the biggest drop in a month, and was the most-actively traded stock by value in Japan. The company kept its annual outlook unchanged, even after reporting a first-half loss that was narrower than forecast.
Canon slumped 3.4 percent to 3,460 yen, the sharpest slide in six weeks. The camera maker posted its seventh-straight quarterly profit drop as the stronger yen eroded the value of exports. Third-quarter net income fell 56 percent to 36.7 billion yen, the company said.
Canon and Toshiba were the biggest drags on the Topix.
To contact the reporter on the story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
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