Japan Stocks Fall on Declining Exports, Strengthening Yen

Japan shares fell the most in three weeks as the yen rose and the nation’s exports declined for a third month, adding to signs of global slowdown. Stocks extended losses on China manufacturing data pointing to a contraction.

Canon Inc. (7751), a camera maker that gets 80 percent of its sales abroad, fell 3.2 percent. Inpex Corp. (1605), Japan’s top oil explorer by market value, slid 3.5 percent after crude fell to a six-week low. Komatsu Ltd. (6301), a construction-equipment maker that gets 15 percent of sales in China.

The Nikkei 225 fell 1.6 percent to close at 9,086.98 in Tokyo, the biggest decline since Aug. 31. Volume on the gauge was almost 25 percent above the 30-day average. The broader Topix (TPX) Index slid 1.4 percent to 753.81, with almost five shares dropping for each that gained. The yen advanced amid speculation Japan’s central bank is lagging global stimulus efforts.

“Investors are keeping their eyes on monetary policy from the U.S., European Central Bank and Bank of Japan,” said Naoki Fujiwara, who helps oversee $6.7 billion at Shinkin Asset Management Co. in Tokyo. “Currency markets have a big impact on earnings at Japanese companies.”

The Topix rebounded 8.4 percent from this year’s low on June 4 as central banks around the world took measures to stimulate growth. The price of shares on the gauge stood at 0.9 times book value, compared with 2.3 times for the Standard & Poor’s 500 Index and 1.5 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.

Futures on the S&P 500 slid 0.4 percent today. The gauge gained 0.1 percent yesterday after sales of existing U.S. homes rose more than expected and the Bank of Japan boosted stimulus.

BOJ Easing

Japan’s central bank yesterday unexpectedly expanded its asset-purchase target by 10 trillion yen to 55 trillion yen, seeking to avoid a further slowdown in the world’s third-largest economy. The move followed last week’s decision by the Federal Reserve to buy mortgage-backed securities until the U.S. labor market recovers. The European Central Bank earlier agreed to unlimited government bond purchases to fight the debt crisis.

The yen appreciated to as high as 78.05 against the dollar today in Tokyo, compared with 79.17 at the close of stock trading yesterday. Against the euro, Japan’s currency climbed to 101.38 from 103.57. A stronger yen cuts overseas income at Japanese companies when repatriated.

“The yen strengthened because foreign investors think the BOJ’s latest stimulus isn’t keeping pace with the Fed’s third round of quantitative easing and the European Central Bank’s monetary policy,” Shinkin Asset Management’s Fujiwara said.

Canon lost 3.2 percent to 2,771 yen. Kyocera Corp., an electronic components maker that earns almost a third of its revenue from the U.S. and Europe, sank 3.2 percent to 6,700 yen.

Exports Decline

Japan’s exports fell 5.8 percent in August from a year earlier, a third straight decline, as a territorial dispute with China and weak global demand cloud the outlook for shipments.

Diplomatic tensions with China have escalated since Japan purchased islands claimed by both nations. Nissan Motor Co. had halted production at two plants in China while Panasonic Corp. reported damage to its operations as protesters smashed store fronts and cars. Fast Retailing Co. plans to reopen its clothing shops there today.

Stocks linked to China fell on data showing that the nation’s manufacturing may contract an 11th month in September, adding to signs that the world’s second-biggest economy is decelerating for a seventh quarter.

Komatsu slipped 3.1 percent to 1,619 yen. TDK Corp., a manufacturer of electronic parts which gets more than 25 percent of its revenue from China, declined 3.2 percent to 3,135 yen.

China Manufacturing

The HSBC Holdings Plc and Markit Economics purchasing managers’ index showed a preliminary reading of 47.8 from a final reading of 47.6 last month. If confirmed, the data would extend the gauge’s longest streak below the expansion- contraction dividing line of 50 in the survey’s eight-year history.

“The manufacturing data may have been affected by the anti-Japanese protests,” Satoshi Nishitsugu, a senior strategist at Okasan Securities Co. in Tokyo.

Energy shares declined the most among the Topix’s 33 industry groups after crude oil for October delivery lost 3.5 percent to $91.98 a barrel in New York yesterday, the lowest settlement since Aug. 3 and the biggest drop since July 23.

Inpex sank 3.5 percent to 479,000 yen, while refiner JX Holdings Inc. slipped 2 percent to 432 yen.

Nippon Telegraph and Telephone Corp., Japan’s top fixed- line phone company, gained the most on the Nikkei 225 (NKY), rising 7.1 percent to 3,855 yen after NTT said it plans to spend as much as 150 billion yen ($191 million) buying back up to 3.4 percent of its shares.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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