Most Japanese stocks declined, with the Topix (TPX) Index falling for a second day, after profit at Chinese industrial companies fell, pointing to a deepening slowdown and outweighing optimism central banks in the U.S. and China will move to boost growth.
Komatsu Ltd. (6301), a construction-machinery maker that gets 14 percent of its sales from China, lost 1.3 percent. Fuji Heavy Industries Ltd. (7270), a carmaker that counts North America as its biggest market, gained 0.5 percent after the yen weakened against the dollar, boosting prospects for exporters. Kansai Electric Power Co. (9503) sank 5.3 percent on a report the utility won’t pay an interim dividend for the first time since 1980. Olympus Corp. (7733) soared 4.4 percent after it agreed to sell the telecommunications business of its ITX Corp. subsidiary.
The Topix fell 0.3 percent to 755.37 at the 3 p.m. close in Tokyo, after rising as much as 0.7 percent earlier. About three shares dropped for every two that gained. The Nikkei 225 Stock Average (NKY) added 0.2 percent to 9,085.39. Volume was more than 30 percent below the 30-day average before a Fed symposium this week at Jackson Hole, Wyoming.
“A tug of war is being seen in the markets,” said Seiichiro Iwamoto, who helps oversee about $34 billion at Mizuho Asset Management Co. in Tokyo. “Investors are groping for reasons to trade shares with few catalysts available. The economy is deteriorating globally, including in China, boosting expectations countries will take stimulus measures to support the markets.”
The Topix has fallen 13 percent from this year’s peak on March 27 on concern earnings will be hurt by Europe’s debt crisis and slowing growth in China and the U.S. The decline has cut the price of shares on the gauge to 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.4 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.
Exporters to China fell after the National Bureau of Statistics said Chinese industrial companies’ profits dropped 5.4 percent last month from a year earlier to 366.8 billion yuan ($57.7 billion).
Komatsu slid 1.3 percent to 1,665 yen. Murata Manufacturing Co. , an electronic-parts company that depends on China and Taiwan for half of its sales, slumped 0.7 percent to 4,070 yen after rising as much as 1.8 percent.
Futures on the S&P 500 were little changed today. The gauge rose 0.7 percent on Aug. 24 in New York after Federal Reserve Chairman Ben S. Bernanke, speaking in a letter dated Aug. 22 to California Republican Darrell Issa, reiterating the statement from the Federal Open Market Committee’s Aug. 1 meeting that the central bank will provide “additional accommodation as needed.” Investors will be watching the Aug. 30 meeting at Jackson Hole closely for signs of another round of quantitative easing.
The yen depreciated to as low as 78.84 against the dollar today in Tokyo, compared with 78.59 at the close of stock trading on Aug. 24, boosting overseas income at some Japanese companies when repatriated.
Fuji Heavy, which makes Subaru vehicles and gets more than 45 percent of its sales in North America, gained 0.5 percent to 651 yen. Uniden Corp. (6815), a communications-equipment maker that gets almost 60 percent of its revenue in North America, climbed 1.7 percent to 180 yen.
“Clearly the chances of further quantitative easing are higher than they were six months ago,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion in assets under management. “The market is looking to Bernanke’s speech at Jackson Hole for additional guidance on policy.”
Chinese Premier Wen Jiabao urged additional measures to support Chinese exports and help meet economic targets as evidence mounts that the nation’s slowdown is deepening.
“The third quarter is a crucial period for realizing full-year targets on export growth,” Wen said during an inspection tour of Guangdong, the nation’s biggest exporting province, the official Xinhua News Agency reported on Aug. 25. “Facing the current difficulties, China should substantially improve the environment for companies’ operation and improve companies’ confidence.”
Olympus jumped 4.4 percent to 1,562 yen, the most on the Nikkei 225, after agreeing to sell subsidiary ITX’s telecommunications arm for 53 billion yen to boost capital as it recovers from a 13-year accounting fraud. Olympus will book a one-time gain in the current quarter from the sale to Japan Industrial Partners, it said in a statement on Aug. 24.
Kansai Electric Power declined the most on the Nikkei 225, falling 5.3 percent to 660 yen after the Nikkei reported the utility won’t issue an interim dividend due to earnings uncertainty, the first non-payment since the 1980 oil crisis. Power companies led the decline among the Topix’s 33 industry groups.
-- With assistance from Adam Haigh in Sydney. Editors: Stuart Biggs, Jim Powell
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