Most Japanese Stocks Fall on Recovery Concern; Bic Camera Drops

By Masaki Kondo

Oct. 6 (Bloomberg) -- Most Japanese stocks fell for a fourth day amid concern an economic recovery will falter and erode profits at domestically oriented companies.

Bic Camera Inc., a consumer-electronics retailer, sagged 4.9 percent after posting a 46 percent drop in annual earnings. Central Japan Railway Co., Japan’s biggest operator of high- speed trains, slid 3.5 percent. Mazda Motor Corp., a carmaker that earns 72 percent of sales outside Japan, climbed 4.3 percent after announcing a plan to sell new shares, paring a 7.6 percent advance as the dollar weakened against the yen.

“The economic outlook is getting hazier,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion. “Investors are starting to wonder when the recovery will lose its momentum. Japan’s domestic economy isn’t resilient enough” to offset a global slowdown.

More than twice as many stocks fell as rose on the Topix index, which was little changed at 867.02 as of 1:13 p.m. in Tokyo. The Nikkei 225 Stock Average was also little changed, at 9,665.98.

The Topix lost 11 percent from this year’s high on Aug. 26 through yesterday as the government of newly elected Prime Minister Yukio Hatoyama failed to convince investors it could revive consumer spending by boosting minimum wages for “hard- working” people. Shares on the gauge traded at 1.07 times corporate net worth yesterday, the lowest level since July 15, according to data compiled by Bloomberg.

‘Challenging Situation’

Bic Camera fell 4.9 percent to 30,200 yen, headed for the lowest close in four months. Operating profit dropped 46 percent in the fiscal year ended Aug. 31, the company said yesterday in a preliminary earnings report, as more spending on marketing failed to counter the “challenging situation caused by stagnant consumption.”

Central Japan, the country’s biggest operator of high-speed trains, slid 3.5 percent to 614,000 yen. Chubu Electric Power Co. sank 2.7 percent to 2,135 yen. Train operators and electricity generators were the heaviest drags on the Topix.

Mazda rose 4.3 percent to 193 yen after losing 20 percent in the past seven days. The automaker said yesterday it will sell new stock and existing shares to raise as much as 96 billion yen ($1.1 billion). Also yesterday, the company narrowed its forecast net loss for this year by 48 percent, citing higher sales and lower costs.

“Stocks are like rubber bands: they push back after being compressed and pull back after being stretched,” said Yoshifumi Kikuchi, head of the dealing division at Tokyo-based Nissan Century Securities Co. “After shares have been sold heavily, even a small piece of positive news will trigger a rebound.”

Dollar, Yen

The dollar’s depreciation weighed on Japan’s stocks as a weaker U.S. currency reduces the value of overseas sales at Japanese companies when converted into their home currency. The dollar weakened to as low as 88.98 yen from 89.64 at the 9 a.m. opening of stock trading in Tokyo.

Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, gained 1.8 percent to 463 yen, and Sumitomo Mitsui Financial Group Inc., the No. 3, added 2.6 percent to 3,130 yen. Financial Services Minister Shizuka Kamei said in an interview yesterday that lenders won’t have to boost provisions for bad loans when borrowers delay repayments.

Kamei said on Sept. 15 that he would consider allowing small businesses to postpone repayments, causing bank shares to underperform the Topix since then.

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