Japan’s Topix Falls After BOJ Decision; Banks Lead Drop

Japan’s Topix Index fell a second day after reaching its highest in two years last week as the Bank of Japan held off on expanding its asset-buying program and the nation’s economy unexpectedly contracted.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, retreated a second day to lead banks lower after reaching its highest since September 2009. Nippon Prologis REIT Inc. soared 24 percent on its trading debut. Meiji Machine Co. tumbled 15 percent after it was put on a watchlist for possible delisting. Taiyo Yuden Co. gained 16 percent after the maker of electronic components raised its profit forecast.

The Topix lost 0.2 percent to 954.88 at the close of trading in Tokyo. The gauge has surged more than 30 percent since elections were announced on Nov. 14 on optimism Prime Minister Shinzo Abe and the central bank will work to stimulate the economy and lead the country out of deflation. The Nikkei 225 Stock Average climbed 0.5 percent to 11,307.28.

“There’s some profit-taking from overseas investors after stocks rose so much over the past couple of months,” said Shuichi Saito, general manager at Chibagin Asset Management Co. “The Bank of Japan meeting was as expected, but it has gotten rid of some of the uncertainty.”

The central bank kept its asset-purchase program unchanged at 76 trillion yen. All 20 economists surveyed by Bloomberg News predicted no additional easing would be announced today. The BOJ last month and pledged to begin open-ended asset purchases in 2014 to stimulate the economy.

Economy Shrinks

Japan’s gross domestic product contracted an annualized 0.4 percent in the three months through December, following a revised 3.8 percent contraction in the previous quarter, the Cabinet Office said in Tokyo today. The estimate of 32 economists surveyed by Bloomberg News was for 0.4 percent growth.

The Topix rose to its highest level since 2001 on Feb. 7. The measure is trading at 1.1 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Mitsubishi UFJ Financial Group lost 1.9 percent to 523 yen, the biggest drag on the Topix, after reached its highest level since Sept. 11, 2009 on Feb. 12. Mizuho Financial Group Inc. fell 1.9 percent, while Sumitomo Mitsui Financial Group Inc. slipped 1.2 percent to 3,760 yen.

Meiji Machine

Meiji Machine tumbled 15 percent to 116 yen, its biggest drop on record, after the company was put on a watchlist for a possible delisting by the Japan Exchange Group yesterday because it may not be able to submit a quarterly report by the deadline.

Square Enix Holdings Co., maker of the Final Fantasy video games, dropped 5.1 percent after the MSCI index compiler said the stock will be removed from the MSCI Japan Index.

Among stocks that rose, Taiyo Yuden jumped 16 percent to 1,028 yen after raising its forecast for a net profit from its previous outlook of breakeven.

Asahi Group Holdings Ltd. jumped 5.8 percent after the brewer announced it will spend as much as 30 billion yen to buy back shares. The company said net income will rise to 65.5 billion yen this year, compared with the 68.1 billion yen average estimate of analysts surveyed by Bloomberg.

Nippon Prologis REIT Inc., a real estate investment trust set up by the world’s largest owner of industrial buildings, surged 24 percent to 682,000 yen in its Tokyo trading debut amid expectations for growing demand for warehouses.

The Nikkei Stock Average Volatility Index lost 4.6 percent to 25.58, indicating traders expect a swing of about 7.3 percent on the benchmark gauge over the next 30 days. Volume on the measure was about 10 percent higher than its 30-day average at the close of trading.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net

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