Nomura Falls With Daiwa on Worsening Market Outlook: Tokyo Mover

Nomura Holdings Inc. (8604) and Daiwa Securities Group Inc. (8601) fell the most this year in Tokyo trading as slumping Japanese stocks and a stronger yen clouded the outlook for business even after they posted better earnings.

Nomura declined 4.6 percent, the steepest drop in five months, to close at 315 yen. Daiwa, the nation’s second-biggest securities firm, tumbled 5.9 percent, the most since Nov. 8, to 286 yen. The Nikkei (NKY) 225 Stock Average slid 1.8 percent.

Trading income drove profit at the two companies in the three months ended March as Japanese stocks had their best quarter since 2009. The Nikkei has since retreated more than 7 percent as Europe’s debt crisis persists and the yen resumes a climb that may threaten the export-led economic recovery.

“Earnings themselves were good,” said Takehito Yamanaka, a Tokyo-based analyst at Credit Suisse Group AG. “Investors are now watching the current quarter and they’re seeing that market conditions haven’t been as good since April.”

Yamanaka said investors may have also sold Nomura stock after it halved its fiscal second-half dividend payment to 2 yen from 4 yen a year earlier. He rates Nomura “outperform” and Daiwa “underperform,” according to data compiled by Bloomberg.

Nomura’s net income rose 86 percent last quarter from a year earlier to 22.1 billion yen ($277 million), the Tokyo-based firm reported on April 27, beating analysts’ 14.4 billion yen average estimate. Profit was helped by a $1.2 billion cost- cutting initiative as well as the gains in trading, making up for declining investment banking fees and brokerage commissions.

The company plans to ease the pace of job cuts, Jonathan Lewis, co-deputy chief financial officer at Nomura, said in an interview after the earnings. Nomura trimmed headcount by 1,302 positions in the six months since the end of September.

Daiwa posted net income of 10.9 billion yen for the fiscal fourth quarter from a loss of 33.1 billion yen a year earlier, led by trading income, it said on April 27. The results still missed the 18.7 billion yen average estimate of analysts as fees and brokerage commissions dropped.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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