Japanese Stocks Fall as Economy Shrinks More Than Forecast on Earthquake

Japanese stocks fell after a report showed the nation’s economy shrank more than estimated in the first quarter and utilities dropped after the Prime Minister said Japan will debate overhauling the energy industry.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest bank by market value, declined 2.1 percent. Tokyo Electric Power Co., the operator of the Fukushima Dai-Ichi nuclear power plant damaged in the record earthquake in March, tumbled 8 percent. Dainippon Screen Manufacturing Co., a chip equipment maker, plunged 5.3 percent after Goldman Sachs Group Inc. cut its rating on chipmaker Intel Corp. (INTC)

The Nikkei 225 (NKY) Stock Average declined 0.4 percent to 9,620.82 at the 3 p.m. close of trading in Tokyo. The broader Topix index dropped 0.7 percent to 831.89 with about three times as many stocks retreating as advancing.

“It was hard to speculate how the impact of the disaster would affect gross domestic product, but the stock market reacted to the figures that fell short of the estimate in the market,” said Masaru Hamasaki, who helps oversee about $18 billion as chief strategist at Toyota Asset Management Co. in Tokyo.

Japan’s economy contracted an annualized 3.7 percent in the three months ended March 31, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 1.9 percent drop.

Banks Retreat

Banks were the heaviest drag on the Topix. Mitsubishi UFJ lost 2.1 percent to 378 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-largest bank, sank 2.1 percent to 2,413 yen. Mizuho Financial Group Inc. (8411), the No. 3, dropped 1.5 percent to 129 yen.

The Topix has lost 11 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, disabled a nuclear power plant and disrupted supply chains at companies. Shares in the gauge traded at 14.7 times book value.

Utility companies had the largest drop among the 33 industry groups in the Topix after Prime Minister Naoto Kan said Japan will debate an overhaul of the nation’s energy industry, in which companies currently hold regional monopolies and are in charge of both power generation and distribution networks.

Energy Industry Overhaul

Tokyo Electric Power tumbled 8 percent to 358 yen. Chubu Electric Power Co., which shut a nuclear plant last week, plunged 5.1 percent to 1,282 yen, a level not seen since May 1985. Kansai Electric Power Co. retreated 4.4 percent to 1,399 yen, also the lowest since May 1985.

Renesas Electronics Corp. (6723), the world’s No. 1 maker of microcontrollers used in cars and mobile phones, fell 3.9 percent to 715 yen. The company, whose production was disrupted by the earthquake, said its net loss in the year ended March 31 swelled to 115 billion yen ($1.4 billion) from 56.4 billion yen a year earlier.

Chip-equipment makers dropped after Goldman Sachs lowered its rating on Intel, the world’s biggest chipmaker, to “sell” from “neutral,” citing slowing processor shipments and increased competition from ARM-based processors in tablets and eventually in mainstream PCs.

Dainippon Screen Manufacturing slumped 5.3 percent to 676 yen, the second-largest drop on the Nikkei. Advantest Corp. (6857) lost 3.4 percent to 1,481 yen. Ibiden Co. sank 3.1 percent to 2,640 yen.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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