Japan Stocks Fall to Lowest Since 2009 on U.S. Deficit Talks, Export Drop

Japanese stocks fell for a second day, sending the Topix Index and Nikkei 225 (NKY) to their lowest closes since March 2009, on speculation a U.S. congressional committee will fail to reach an agreement on deficit-cutting measures and after a report showed Japanese exports fell.

Honda Motor Co., a carmaker that gets 83 percent of its sales abroad, retreated 2.2 percent. Elpida Memory Inc. (6665), a producer of computer-memory chips, led a drop among chipmakers after Japan’s exports dropped more than expected, dragged down by declines in semiconductors and ships. Osaka Securities Exchange Co. rose 1.8 percent after a newspaper reported the bourse will announce a merger agreement with Tokyo Stock Exchange Group Inc. tomorrow.

The Nikkei 225 Stock Average fell 0.3 percent to 8,348.27 as of the 3 p.m. close of trading in Tokyo, the lowest close since March 31, 2009. The Topix Index dropped 0.4 percent to 717.08, the lowest close since March 12, 2009.

“There’s likely to be a continuing impasse and people will focus on the stability of the U.S. politically,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “People will probably sit on the sideline and wait for clarity.”

The value of shares traded on the first section of the Tokyo Stock Exchange fell to the second lowest this year, after the bourse today shortened the trading lunch break by half an hour to boost transactions. The value dropped to 757 billion yen ($9.9 billion) today, compared to 729 billion on Nov. 15, the lowest since December.

Futures on the Standard & Poor’s 500 Index fell 0.7 percent today. The index was little changed in New York on Nov. 18.

‘Daunting Challenge’

The U.S. congressional debt-reduction committee faces a “daunting challenge” as its 12 members seek to bridge gulfs over taxes and spending by a Nov. 23 deadline, Texas Representative Jeb Hensarling, the Republican co-chairman, said yesterday. Time is running out for a plan to carve at least $1.2 trillion off the federal budget, he said.

“The market continues to be in a downtrend as nothing has changed since last week,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $120 billion. “Speculation is mounting that the U.S. may end up putting off the deficit issue. The market’s tide won’t change unless something new comes out of Europe.”

German Economy Minister Philipp Roesler said the European Central Bank isn’t responsible for buying the region’s debt because the European Financial Stability Facility was put in place to help countries reduce interest rates on their debt. Roesler made the comments in an interview with German newspaper Schleswig-Holstein am Sonntag.

Honda, Sony

Carmakers and electronic-equipment makers were the biggest drags on the Topix. Honda dropped 2.2 percent to 2,153 yen. Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, fell 2.6 percent to 2,385 yen. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, slid 2.8 percent to 1,266 yen, while Panasonic Corp. (6752), the nation’s top producer of consumer electronics by market value, lost 2 percent to 672 yen.

Exports Drop

Chipmakers and shippers fell after a report showed Japan’s exports declined 3.7 percent last month from a year earlier. The median estimate of economists surveyed by Bloomberg News was for a 0.3 percent drop. Exports of semiconductors plunged 21 percent and those of ships slid 32 percent last month.

Elpida dropped 7.3 percent to 319 yen, and Advantest Corp. (6857), a maker of memory-chip testers, lost 4.5 percent to 810 yen. Nippon Yusen K.K., Japan’s biggest shipping line by sales, fell 3 percent to 161 yen, and Mitsui O.S.K. Lines Ltd., No. 2 in the sector, slid 6.9 percent to 228 yen.

The Topix has lost about 6 percent this month amid concern Europe’s debt crisis is spreading to Italy and Spain, damping the earnings outlook for Japan’s exporters. The decline has cut the price of shares on the index to 0.86 times estimated book value, the lowest level since March 2009.

Osaka Securities Exchange and the Tokyo Stock Exchange agreed to merge and are set to announce the deal tomorrow, the Nikkei newspaper reported.

The combination would give the 133-year-old Tokyo bourse access to Osaka’s derivatives trading system and may create the world’s seventh-largest exchange company by share value. Osaka Securities gained 1.8 percent to 421,000 yen.

Olympus Corp. (7733), the scandal-hit optical-equipment maker, jumped by its daily limit to 725 yen after Yoshinobu Tsutsui, president of Nippon Life Insurance Co., said Japan’s biggest life insurer will continue to support the firm. Nippon Life and a subsidiary earlier cut their combined stake in Olympus to 5.11 percent from 8.18 percent, according to a Nov. 17 filing with Japan’s finance ministry.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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