Japan Stocks Snap Five-Day Gain on China Slowdown Concern

Japanese shares declined, sending the Nikkei 225 (NKY) Stock Average to its first drop in six days, on concern China’s economy is slowing and amid signals the stock market may have risen too far, too fast.

Komatsu Ltd. (6301), a construction machinery maker that counts China as its biggest market, fell 3.4 percent. Nomura Holdings Inc., a brokerage whose stock rose by about a third over the past six months, slumped 4.1 percent. Sony Corp. (6758) sank 4.5 percent after Goldman Sachs Group Inc. recommended selling the stock. Advantest Corp., a manufacturer of memory-chip testers, jumped 5.8 percent after BNP Paribas SA raised its rating on the semiconductor industry.

The Nikkei 225 fell 0.6 percent to 10,086.49 at the 3 p.m. close in Tokyo, with trading volume 16 percent higher than the 100-day average. The broader Topix (TPX) Index lost 1.1 percent to 858.78. Stocks dropped today as the Australian government cut its forecast for commodity sales after China lowered its economic growth forecast for the first time since 2005.

“China’s economic slowdown is a catalyst for selling amid overheating markets,” Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “Stocks are quite high and investors are cautious.”

The Topix (TPX) has advanced 18 percent this year amid signs the U.S. economy is recovering. The gain has boosted the value of stocks on the gauge to 1.05 times book value, up from 0.88 in December, according to Bloomberg data. A number below 1 means companies can be bought for less than value of their assets.

Technical Indicators

The 25-day Toraku (TORAKU), which compares advancing and declining shares on the Tokyo Stock Exchange, held for a 26th day above 120, a level indicating to traders the market may fall.

Nomura and other brokerages declined the most today among the Topix’s 33 industry groups after leading gains over the past six months. Nomura slumped 4.1 percent to 396 yen, while Daiwa Securities Group fell 4 percent to 339 yen.

Futures on the Standard & Poor’s 500 Index (SPXL1) added 0.2 percent today. The gauge fell 0.3 percent in New York yesterday after China raised fuel prices for the second time in less than six weeks.

Mainland vehicle sales this year will probably miss an 8 percent growth forecast as the slowing economy and rising fuel costs curb buying, Gu Xianghua, deputy secretary general of the China Association of Automobile Manufacturers, said yesterday.

China Stocks Fall

China-related stocks fell. Nissan Motor Co., a carmaker than gets 20 percent of its revenue in Asia excluding Japan, fell 2.9 percent to 865 yen. Komatsu lost 3.4 percent to 2,424 yen. Nippon Yusen K.K., a shipping line that counts Asia as its biggest market, declined 1.9 percent to 261 yen.

Mitsubishi Corp. (8058), a trading house that counts commodities as its biggest source of profit, slid 2 percent to 1,986 yen. Inpex Corp., Japan’s biggest energy explorer by market value, fell 2.4 percent to 563,000 yen. Japan Petroleum Exploration Co. lost 2 percent to 3,920 yen.

Crude for April delivery fell 2.3 percent to settle at $105.61 a barrel yesterday in New York, the biggest one-day decline since Dec. 14. The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum lost 1.5 percent yesterday, the largest drop since March 6.

‘Sony Struggling’

Among other companies that fell, Sony retreated 4.5 percent to 1,733 yen after Goldman Sachs Group Inc. cut its rating on the consumer electronics maker to “sell” from “neutral,” saying “Sony is struggling to adapt to the realty of structural decay in its traditional entertainment hardware business.”

Advantest (6857) gained the most in the Nikkei 225, rallying 5.8 percent to 1,270 yen after BNP Paribas raised the semiconductor sector rating to “improving,” reflecting growing demand for smartphones.

“We expect the inventory and order cycle to improve in April-June, and earnings results due out from April to provide further confirmation of a recovery across the semiconductor industry,” the BNP report said. Sumco Corp., a silicon wafer producer, also climbed 3.8 percent to 1,033 yen.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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

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