By Kana Nishizawa and Masaki Kondo
Nov. 2 (Bloomberg) -- Japanese stocks dropped the most in a month as earnings disappointed investors and a stronger yen hurt the outlook for exporters’ earnings.
Daiwa Securities Group Inc. tumbled 4.5 percent as Japan’s No. 2 brokerage reported second-quarter net income that missed analysts’ estimates. Canon Inc., the world’s largest camera maker, dropped 3.1 percent. Mitsubishi Corp., Japan’s largest trading company which generates more than half of its profit from raw materials, declined 3.1 percent on lower commodity prices. Stocks also fell after CIT Group Inc. filed the biggest bankruptcy claim in the U.S. in more than a year.
The Nikkei 225 Stock Average declined 2.3 percent to 9,802.95 at the 3 p.m. close in Tokyo, the biggest drop since Oct. 2. The broader Topix index lost 1.6 percent to 880.54, paring losses of as much 2.2 percent after the yen trimmed gains at midday. The benchmark added 24 percent from this year’s low on March 9, as government spending helped revive growth.
“I can’t expect government stimulus measures to continue to shore up company earnings,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion. “Doubt is rapidly growing that corporate profits will continue to improve next year.”
In New York, the Standard & Poor’s 500 Index fell 2.8 percent to 1,039.19 on Oct. 30. Americans cut spending 0.5 percent in September, the first decline in five months, according to the Commerce Department. New-York based CIT filed for bankruptcy on Nov. 1, with $71 billion in assets and $64.9 billion in debt. It was the biggest corporate failure since September 2008.
Daiwa Securities
Daiwa Securities plunged 4.5 percent to 469 yen, the sharpest slide in more than five weeks. Japan’s second-largest brokerage reported second-quarter profit of 1.99 billion yen that missed analysts’ estimates because of lower-than- anticipated trading revenue.
Sumitomo Electric Industries Ltd. retreated 5.7 percent to 1,061 yen, the level not seen since July 22. The electric-wire maker swung to a first-half net loss of 9.74 billion yen from the previous year’s profit, with a 35 percent drop in sales, as demand from automakers slumped.
Brother Industries Ltd. sank 5 percent to 999 yen after the office equipment maker said first-half net income plunged 58 percent to 4.92 billion yen, with a 22 percent drop in sales, citing the yen’s strengthening and charges related to employees’ retirement program.
Sony Falls
Sony Corp., Japan’s biggest exporter of televisions, tumbled 5.8 percent to 2,625 yen, falling the most since May 18, even after the company narrowed its full-year net loss forecast to 95 billion yen from 120 billion yen.
“The main issue for the 2009 fiscal year in our view, is the delay in introducing LED TVs,” Yoshiharu Izumi, an analyst at JPMorgan Chase & Co., wrote in a report dated today. “Solid progress has thus been made on planned cost cuts, but they have not helped profits improve much because price cuts have hurt, owing to product weaknesses.”
The yen appreciated to a three-week high of 89.20 against the dollar before weakening to 90.039 at the close of stock trading. A stronger yen reduces income when overseas revenue is converted into local currency.
“The yen stopped strengthening, which is supporting Japanese stocks,” said Yumi Nishimura, an equity market analyst at Daiwa Securities SMBC Co.
Exporters Decline
Manufacturing in China expanded at the fastest pace in 18 months, according to a purchasing managers’ index released by HSBC Holdings Plc today and also a government-backed PMI released yesterday. The HSBC index rose to a seasonally adjusted 55.4 from 55 in September, an e-mailed statement showed.
“An improvement in PMI, which boosted expectations for recovery in the Chinese economy, is also lifting investor sentiment” in Japanese stocks, Nishimura said.
Canon declined 3.1 percent to 3,420 yen. Honda Motor Co., Japan’s second-largest carmaker which generated 86 percent of its sales overseas last year, dropped 2.1 percent to 2,820 yen. Mazda Motor Corp., Japan’s second-largest car exporter, retreated 3.3 percent to 204 yen.
Crude oil for December delivery lost 3.6 percent to $77 a barrel on Oct. 30 in New York. The London Metals Index, a measure of six metals including copper and zinc, dropped 2.8 percent.
Mitsubishi fell 3.1 percent to 1,915 yen. Nippon Mining Holdings Inc., Japan’s biggest copper producer, retreated 6 percent to 390 yen, the lowest since March 31. Mitsui & Co., whose profit is the most sensitive among Japan’s five largest trading houses to changes in the price of oil, dropped 3.1 percent to 1,185 yen.
Consumer Lenders
The Nikkei newspaper reported on Nov. 1 that Japan may back away from tightening regulations on credit providers to ease fund-raising strains on the self-employed. The government will ease restrictions that would cap interest charges by lenders including consumer finance companies at 20 percent next June, from 29.2 percent, and a regulation which limits total unsecured borrowing to a third of annual income, the report said.
Consumer lenders jumped 5.8 percent, the biggest gain among the 33 groups on the Topix index. Acom Co., Japan’s largest consumer lender by market value, leapt by its daily limit, rising 17 percent to 1,372 yen, the largest advance in two years. Aiful Corp., the second-largest consumer lender by assets, soared 17 percent to 156 yen. Takefuji Corp. surged by its daily limit, gaining 23 percent to 427 yen.
To contact the reporter for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net
Posts
No comments:
Post a Comment