Japan Stocks Reverse Gains After BOJ Expands Asset Plan

Japanese stocks declined for a third day, reversing gains after the Bank of Japan today expanded its asset-purchase program to 66 trillion yen ($830 billion) and the yen climbed against all of its major counterparts.

Nissan Motor Co., a carmaker that gets almost a third of its sales in North America, slid 2.5 percent after rising as much as 0.8 percent. Fujikura Ltd. (5803) sank 4.6 percent after the cable manufacturer halved its profit forecast. Sharp Corp. jumped 6.2 percent on a report the electronics company is in investment talks with Apple Inc., Google Inc. and Microsoft Corp.

The Nikkei 225 Stock Average (NKY) fell 1 percent to 8,841.98 at the 3 p.m. close in Tokyo, reversing gains of as much as 0.7 percent after the central bank expanded its asset-purchase fund by 11 trillion yen. Volume on the gauge was more than 15 percent above the 30-day average. The broader Topix (TPX) Index fell 0.9 percent to 733.46, with more than three shares dropping for each that gained.

“Most people had forecast and priced in further easing this time,” said Soichiro Monji, chief strategist at Tokyo- based Daiwa SB Investments Ltd., which manages the equivalent of about 5 trillion yen ($63 billion). “Investors are selling to lock in profit after the announcement, learning lessons from September, when a rally lasted for only a few hours.”

The Topix rose 2 percent from Sept. 6 after the European Central Bank started a global wave of monetary policy easing to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the stock gauge traded at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index.

Easing Expectations

All but one of 27 economists surveyed by Bloomberg News had predicted easing, with the majority expecting a 10 trillion yen expansion. The central bank last eased policy on Sept. 19, when it surprised markets by expanding its asset-purchase fund by 10 trillion yen.

The yen climbed after the Bank of Japan’s second round of easing in two months disappointed some investors expecting more. The yen appreciated to as high as 79.46 against the dollar today in Tokyo, compared with 79.78 when stock trading opened today. Japan’s currency strengthened to 102.37 against the euro from 102.97. A stronger yen cuts overseas income at Japanese companies when repatriated.

Nissan slid 2.5 percent to 653 yen. Nintendo Co., a gaming console maker that gets 34 percent of its sales in the Americas, fell 1 percent to 10,040 yen, reversing earlier gains of as much as 2.3 percent.

Hurricane Sandy

Futures on the S&P 500 fell 0.6 percent in New York. U.S. equities trading was halted a second day as Hurricane Sandy lashed the East Coast. Exchanges are planning to reopen tomorrow if weather permits, according to statements from NYSE Euronext and Nasdaq OMX Group Inc.

Japan’s current earnings season peaks this week, with 571 of 1,672 Topix companies reporting results. Of the 400 companies on the gauge that have reported quarterly revenue since Oct. 1 and for which Bloomberg News has estimates, 63 percent have fallen short of expectations.

Fujikura lost 4.6 percent to 226 yen after cutting its full-year net-income forecast 50 percent to 2 billion yen ($25 million), citing rising competition both in Japan and abroad.

Mitsumi Electric Co. (6767) plunged 12 percent to 388 yen, the biggest decline on the Nikkei 225 and the stock’s lowest level since 1983, after the electronic-parts maker said it expects loss of 12.5 billion yen in the year ending March 31.

Sharp soared 6.2 percent to 172 yen after Kyodo News said the maker of liquid-crystal displays is in talks with Apple, Google and Microsoft to jointly develop tablet computers and supply the companies with panels. Miyuki Nakayama, a spokeswoman for Sharp, declined to comment on the report of the tie-up talks.

The Nikkei Stock Average Volatility Index (VNKY) fell 1.9 percent to 19.99, indicating that traders expect a swing of 5.7 percent on the equity benchmark in the next 30 days.

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