Topix Caps Longest Loss Streak Since 2010 on U.S. Retail

Most Japanese stocks fell, with the Topix Index capping its longest losing streak in two years, as U.S. retail sales unexpectedly slid and the yen rose to a month high against the dollar. Losses were limited after the International Monetary Fund raised Japan’s growth forecast.

Sony Corp., the nation’s leading exporter of consumer electronics, dropped 3.4 percent. Hokuriku Electric (9505) Power Co. paced declines among utilities amid renewed concern about nuclear plants. Real estate shares gained after the IMF cited stronger-than-expected domestic demand in Japan.

The Topix lost 0.4 percent to 743.38 at the 3 p.m. trading close in Tokyo, falling for an eighth day, the longest string of losses since July 2010. The Nikkei 225 Stock Average rose 0.4 percent to 8,755.00 following a three-day weekend.

“Japanese stocks, especially exporters, are taking direct hits from the yen’s move,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about 5 trillion yen ($63 billion). “Utilities will face tougher conditions ahead for sure. A little restart of nuclear plants can’t make up for all the nuclear fleet, and public options are making it hard for them to raise power rates.”

The Topix (TPX) rebounded about 7 percent since June 4, when it closed at its lowest since 1983, as concern eased about Europe’s debt crisis after bailout terms were loosened for lenders and on optimism central banks around the world will ease policy.

Shares on the index are valued at 0.9 times book value, compared with 2.1 times for the Standard & Poor’s 500 Index and 1.4 for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.

U.S. Retail

Futures on the S&P 500 (SPXL1) added 0.5 percent today. The gauge lost 0.2 percent in New York yesterday after U.S. retail sales unexpectedly dropped in June amid limited employment gains. Federal Reserve Chairman Ben S. Bernanke may hint at further stimulus today when he delivers his semiannual report on the economy and monetary policy before Congress.

Exporters to the U.S. dropped after the yen reached 78.69 against the dollar yesterday, the strongest since June 18. A stronger Japanese currency reduces the value of overseas earnings for exporters when repatriated. Sony dropped 3.4 percent to 964 yen. Mazda Motor Corp. (7261), an automaker that gets 28 percent of its sales in North America, dropped 3.2 percent to 92 yen.

“Earnings season will start in earnest in Japan next week, and investors don’t want to make a big move for now,” said Takashi Ito, a strategist equity market at Nomura Securities Co., Japan’s biggest brokerage.

Of the 1,671 companies on the Topix Index, 209 companies are scheduled to report earnings next week, according to data compiled by Bloomberg News.

Utilities Slide

Utility shares had the second-biggest decline among the Topix’s 33 industry groups after a government advisory body on July 13 recommended breaking up power generators’ regional distribution monopolies. Tokyo Electric Power Co. (9501), the utility at the center of the Fukushima nuclear disaster, slumped 11.5 percent to a record-low 123 yen.

Tens of thousands of people packed Tokyo’s Yoyogi Park yesterday for the nation’s biggest anti-nuclear rally since last year’s meltdowns in Fukushima.

Hokuriku Electric slid 8.3 percent to 1,115 yen. The shares fell after government research suggests a strong possibility a fault may be active beneath the utility’s Shika nuclear power station about 300 kilometers (190 miles) northwest of Tokyo, Kyodo News reported, citing people familiar with the matter.

Kansai Electric Power Co., the country’s second-largest utility, fell 7.2 percent to 809 yen. Alarms went off at a reactor in Ohi scheduled for restart tomorrow.

Among other stocks that fell, JX Holdings Inc. slipped 7.8 percent to 356 yen. The oil refiner said it will shut processing at one its plants after finding falsified safety reports.

IMF Forecast

Losses were limited after the International Monetary Fund raised Japan’s growth forecast for 2012. The economy will expand 2.4 percent this year, up from a 0.4 percent estimate for expansion in April, while the IMF trimmed its global economic forecast.

Leopalace21 Corp. led real estate companies higher, gaining 7.2 percent to 267 yen. Tokyu Livable Inc. added 4.1 percent to 921 yen.

The Nikkei 225 Volatility Index (VNKY) declined 1.2 percent to 18.75, indicating traders expect a swing of about 5.4 percent on the benchmark gauge over the next 30 days. Trading volume on the Nikkei was 4 percent below the 30-day average.

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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