Japanese Stocks Decline on Falling Factory Production, U.S. Housing Prices

Japanese stocks fell for a second day, with the Nikkei 225 Stock Average (NKY) headed for its biggest annual decline since 2008, after U.S. housing prices and Japanese factory output dropped.

Sony Corp., Japan’s No. 1 exporter of consumer electronics, lost 2.4 percent. Tokyo Electric Power Co. (9501) plunged 12 percent to an all-time low after the trade minister said the utility should consider temporary government control. J. Front Retailing Co. gained 3.7 percent after more than doubling its profit forecast on lower taxes.

Nikkei 225 Stock Average fell 0.2 percent to 8,423.62 at the 3 p.m. close in Tokyo. With two trading days left this year, the Nikkei is set for an 18 percent annual drop. Volume on the gauge was more than 40 percent below the 100-day average, according to data compiled by Bloomberg. The broader Topix Index slipped 0.4 percent to 721.45.

“There’s no incentive for investors to move their positions at the end of year,” said Hisakazu Amano, who helps oversee the equivalent of $29 billion at Tokyo-based T&D Asset Management Co. “The bottleneck is U.S. housing data.”

Futures on the Standard & Poor’s 500 Index (SPXL1) fell 0.3 percent today after the S&P/Case-Shiller index, a gauge of property values in 20 cities, dropped 3.4 percent in October from a year earlier. The median forecast of economists in a Bloomberg News survey projected a 3.2 percent decrease.

Tepco Plunges

Tokyo Electric dropped 12 percent to 186 yen, the lowest since its listing in August 1951. The power producer also known as Tepco needs to consider all options for survival, including the government taking temporary control, Trade Minister Yukio Edano told company President Toshio Nishizawa yesterday. The utility at the heart of the nuclear disaster is headed for a 91 percent plunge this year, making it the worst performer on the 1,659-member Topix.

The Trade Ministry said today factory output fell 2.6 percent in November from the month before, when it rose 2.2 percent. The decline was three times larger than estimated by analysts surveyed by Bloomberg. Production for exporters such as Honda Motor Co. and Sony Corp. has been hurt by a strong yen, slowing demand and Thai floods, hampering Japan’s recovery from the March disaster.

Topix in 2012

The Topix has plunged 20 percent this year, sending the value of shares to an average of 0.86 times estimated book value, the lowest since March 2009 and half the value of stocks (TPX) on the S&P 500. Analysts are projecting a 20 percent gain in 2012.

The natural disasters “are things that happen once every 80 years,” said David Herro, manager of the $7.1 billion Oakmark International Fund, who in February called Japanese shares a “steal.” About a quarter of the fund’s assets are invested in Japan. “If you liked Japanese stocks last year at 120 percent of book, you should like them better at 90 percent of book,” he said by phone on Dec. 22.

The following are among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Ex-Dividend: Yesterday was the last day of the year to buy shares and still get a dividend in 117 companies on the Topix. Among them, brewer Sapporo Holdings Ltd. (2501) (2501 JT) slid 1.4 percent to 291 yen. TonenGeneral Sekiyu K.K. (5012) (5012 JT), a unit of Exxon Mobil Corp., lost 1.6 percent to 839 yen.

J. Front Retailing Co. (3086 JT), an operator of department stores and supermarkets, climbed 3.7 percent to 368 yen. The retailer more than doubled its full-year net-income forecast to 17.6 billion yen ($224 million) from 7.6 billion yen, citing lower corporate taxes.

J Trust Co. (8508 JO), rallied 7.1 percent to 500 yen after the Nikkei newspaper reported bankrupt consumer lender Takefuji Corp. (8564) (8564 JP) may pick the financial-services company as an investor for its restructuring. TPG Capital (8818Z US) was also named as a candidate.

Nitto Boseki Co. (3110 JT), a maker of building materials, sank 5 percent to 267 yen after slashing its full-year net- income forecast 42 percent to 1.4 billion yen. The company plans to reverse some of its deferred tax assets after passage of a new tax law.

-- With assistance from Masaaki Iwamoto in Tokyo. Editors: Jim Powell, Jason Clenfield.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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

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