Japanese Stock Futures Fall on Yen, Fading Optimism on Cyprus

Japanese stock futures fell after the yen gained against the euro on concern Cyprus’s bank- restructuring plan will be used as a template for other European nations. Australian equities futures dropped.

American depositary receipts of Sony Corp. (6758), an exporter of consumer electronics that gets a fifth of its revenue in Europe, declined 2.2 percent from the Tokyo close. ADRs of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, fell 2 percent. BHP Billiton Ltd. (BHP), the world’s biggest mining company, lost 1 percent in Sydney.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 12,390 in Chicago yesterday, compared with 12,510 in Osaka, Japan. They were bid in the pre-market at 12,370 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 0.3 percent today. New Zealand’s NZX 50 Index added 0.2 percent in Wellington.

Investors are considering if the Cyprus plan “is a genuine one-off or something that may be used as a precedent,” said Prasad Patkar, portfolio manager who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity markets have had a very strong run, reflecting the improved economic conditions and earnings, but those gains will need to be consolidated. Cyprus was the catalyst for that consolidation to commence.”

Cyprus Bailout

Asian shares rose yesterday as Cyprus, the euro-area’s third-smallest economy, met the terms for a 10 billion-euro ($13 billion) bailout. Cypriot President Nicos Anastasiades agreed to shut the country’s second-largest bank, and will impose tax on deposits of more than 100,000 euros.

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.1 percent today. The index fell 0.3 percent in New York yesterday, reversing earlier gains, as Reuters reported that Dutch Finance Minister Jeroen Dijsselbloem said the Cyprus bailout should be viewed as a template for solving banking problems in the euro region.

The yen gained 1.4 percent to 121.04 per euro yesterday, damping earnings prospects for Japanese exporters to Europe.

The MSCI Asia Pacific Index (MXAP) gained 4.9 percent this year through yesterday on improving economic data from the U.S. and speculation that Japan will deploy more stimulus. The Asian benchmark traded at 15 times estimated earnings on average, compared with 14 times for the S&P 500 and 12.6 times for the Stoxx Europe 600 Index.

Japan and the European Union announced they will start free trade talks in April, as Japanese Prime Minister Shinzo Abe pushes for deregulation in a bid to revive the world’s third- largest economy.

The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. slipped 0.2 percent to 92.08 yesterday.

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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