Most Japanese Stocks Fall on Earnings, Forecasts; Nissan Drops

By Akiko Ikeda and Kotaro Tsunetomi

Nov. 9 (Bloomberg) -- Most Japanese stocks fell, dragging the Topix index to its lowest close in a month, after companies reported lower earnings or forecast losses.

Mitsubishi Rayon Co., a maker of synthetic fiber, sank 4.6 percent and NOK Corp., a maker of carparts, lost 11 percent after they forecast wider full-year losses. Nissan Motor Co., a carmaker that gets about 75 percent of sales abroad, lost 2.3 percent as the yen strengthened against the dollar.

“The market lacks any market-moving news for active trading, since the peak for Japanese earnings has already passed,” said Daisuke Shimazu, an investment manager in Tokyo at Sumitomo Trust Banking Co., which has about $200 billion in assets.

The Topix fell 0.4 percent to 870.67 in Tokyo, the lowest close since Oct. 5, as about two shares declined for each that advanced. The Nikkei 225 Stock Average gained 0.2 percent to 9,808.99, boosted by insurance companies.

Of the companies in the Topix that have announced financial results this earnings season, 58 percent have reported declines, according to data compiled by Bloomberg. Stocks in gauge are valued at almost 36 times estimated earnings on average, compared with 20 times at the beginning of the year.

Nippon Telegraph & Telephone Corp., Japan’s biggest phone company, retreated 1.6 percent to 3,680 yen, the steepest decline since Oct. 8. The Nikkei newspaper said the company’s operating profit probably fell 15 percent in April to September from a year earlier, due to decreased mobile-phone revenue.

Profits, Losses

NOK plunged 11 percent to 1,057 yen, the sharpest slide since Nov. 12 last year, after the maker of oil seals and rubber products forecast a net loss of 5.1 billion yen ($57 million) for the year ending March 31, compared with its earlier estimate of a deficit of 4.5 billion yen.

Mitsubishi Rayon sank 4.6 percent to 289 yen. The synthetic-fiber maker widened its full-year net loss projection to 8.5 billion yen from 1 billion yen, citing foreign-exchange losses and fixed-asset devaluations.

The yen gained to as much as 89.69 against the dollar today, 13 percent stronger than its low for the year in April. That reduces earnings at Japanese companies when overseas revenue is converted into their home currency. Nissan, Japan’s third- biggest automaker, lost 2.3 percent to 642 yen.

“If the yen strengthens to 85 or 80, many companies won’t be able to make up exchange-rate losses,” said Takeshi Osawa, a senior fund manager in Tokyo at Norinchukin Zenkyoren Asset Management Co.

Topix Advances Least

The Topix has risen 1.3 percent this year, the least among the world’s 10 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 18 percent this year, and the Dow Jones Stoxx 600 Index in Europe has added 22 percent.

Taiyo Yuden Co. lost 4.7 percent to 942 yen, the lowest since June 23. The maker of electronic components swung to a first-half net loss of 1.42 billion yen from a profit the previous year, as sales declined 13 percent.

Insurance companies rose the most among the 33 industry groups in the Topix. Mitsui Sumitomo Insurance Group Holdings Inc. jumped 8.6 percent to 2,275 yen, the largest gain in the Nikkei 225, after its first-half net income unexpectedly rose to 57 billion yen because of smaller-than-expected payouts for typhoons and other natural disasters.

Insurance Companies Gain

Tokio Marine Holdings Inc., Japan’s largest insurer by market value, climbed 4.3 percent to 2,445 yen. The company said in a preliminary earnings statement that first-half net income totaled 71 billion yen, 78 percent more than forecast, on higher-than-expected sales. Mitsui Sumitomo Insurance and Tokio Marine were the biggest positive contributors to the Topix.

“With the typhoon season having passed, we expect any future natural disaster-related losses to be small and think the actual size of these losses will provide upside to full-year earnings,” Masayoshi Kobayashi, an analyst at Nomura Holdings Inc., said in a report dated Nov. 6. “We think this is a good time to reappraise and consider buying non-life insurance stocks based on earnings improvement.”

Aioi Insurance Co. surged 8.7 percent to 427 yen. The casualty insurer doubled its full-year net income projection to 16 billion yen, citing fewer-than-expected typhoons and other natural disasters.

Citizen Holdings Co. soared 7.8 percent to 526 yen, rising the most since May 13. The watchmaker boosted its full-year operating profit outlook 83 percent to 5.5 billion yen, citing lower fixed costs. Operating profit in the six months ended Sept. 30 plunged 82 percent to 1.73 billion yen, as sales fell by 28 percent, the company said in a release.

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