Most Japanese Stocks Fall as Dollar Slips; Sony, Nintendo Drop

By Akiko Ikeda and Kotaro Tsunetomi

Nov. 11 (Bloomberg) -- Most Japanese stocks fell as the dollar weakened against the yen to the lowest level in more than a week and companies reported lower earnings or forecasts.

Nintendo Co., the maker of video-game consoles that gets almost 90 percent of sales overseas, dropped 1.3 percent. Sony Corp., an electronics maker that generates 25 percent of sales in the U.S., fell 1 percent. Dowa Holdings Co., a smelter, and Pacific Metals Co., a maker of stainless steel, both sank more than 5 percent after their profits plunged. Aeon Co., lost 5 percent after saying it will sell bonds convertible into stock.

“If the yen strengthens further, the market will face a severe situation and investors will react strongly,” said Kiyoshi Noda, a senior fund manager at Tokyo-based MU Investment Co., which oversees the equivalent of $13 billion.

More than two shares declined for each that advanced in the Topix index, which fell 0.15 point, or less than 0.1 percent, to close at 872.29 in Tokyo. The Nikkei 225 Stock Average rose 0.95 point, also less than 0.1 percent, to 9,871.68.

The dollar weakened to as low as 89.29 yen, the least since Nov. 2. That reduces the value of sales generated overseas by Japanese companies when converted into their home currency.

Nintendo, the world’s biggest maker of video-game consoles, dropped 1.3 percent to 23,150 yen and was the biggest single drag on the Topix. Sony lost 1 percent to 2,590 yen. Tokyo Electron Ltd., a maker of semiconductor equipment that generates almost 60 percent of sales outside Japan, slumped 2 percent to 4,880 yen and Advantest Corp., which makes chip-testing equipment, fell 1.7 percent to 1,975.

Fast Retailing Record

Fast Retailing Co., operator of the Uniqlo casual clothing chain, added 1.4 percent to a record close of 16,920. The company was the largest contributor to the Nikkei’s gain and overtook Seven & I Holdings Co. as Japan’s largest retailer by market value.

Stocks advanced in the morning after a report from the Cabinet Office showed machinery orders, an indicator of business investment in three to six months, climbed 10.5 percent in September from a month earlier. That’s more than twice the 4.1 percent average estimate by 25 economists surveyed by Bloomberg.

The Topix Machinery Index of 124 companies rose to the highest level this month, led by tractor maker Kubota Corp., which climbed 4.1 percent to 790 yen. Sumitomo Heavy Industries Ltd., Japan’s largest maker of plastic injection-molding gear, advanced 3.6 percent to 431 yen.

“The data on machinery orders weren’t strong enough to boost investors’ sentiment,” said Seiichiro Iwamoto, who manages the equivalent of $977 million at Mizuho Asset Management Co. “The full-fledged recovery is not yet underway.”

Topix Lags Behind

The Topix has risen 1.5 percent this year, the least among the world’s 20 largest equity markets, as the global recession sapped demand for companies’ products and the stronger yen hurt exporters. The Standard & Poor’s 500 Index in the U.S. has climbed 21 percent this year, and the Dow Jones Stoxx 600 Index in Europe has added 24 percent.

Stocks in the Topix are valued at 36 times estimated earnings, versus 17 times for the S&P and 15 times for the Stoxx.

Aeon tumbled 5 percent to 736 yen, the lowest in seven months. The retailer said it will sell 100 billion yen ($1.1 billion) of convertible bonds in two maturities to retire commercial paper and repay debt. Aeon’s rating was reduced to “underweight” from “neutral” at JPMorgan Chase & Co.

Japan Wind Development Co. plummeted 9 percent to 297,500 yen, a level not seen since May 22, as the company said it will raise as much as 7.5 billion yen in a sale of new shares and use the funds for capital spending and investment in subsidiaries.

Dowa Holdings Co. tumbled 6 percent to 503 yen, the sharpest decline in the Nikkei. The metal-products smelter said first-half net income plunged 65 percent as sales fell by 40 percent. Pacific Metals Co. slumped 5.5 percent to 641 yen after the maker of stainless steel said profit sank 72 percent.

Japan Airport Terminal Co., an operator of buildings at Tokyo’s Haneda Airport, retreated 2.3 percent to 1,188 yen, the lowest since Oct. 9. The company posted a 45 percent drop in first-half profit and cut its full-year forecast by 27 percent.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Kotaro Tsunetomi at ktsunetomi@bloomberg.net.