Most Japan Stocks Drop as Yen Rebounds; Developers Fall

Most Japanese stocks fell amid concern shares have risen too fast and as the country’s currency rebounded after approaching 100 yen to the U.S. dollar.

Mitsubishi Estate Co., Japan’s biggest developer by market value, led real-estate stocks lower after the sector rose to its highest level in 5 1/2 years yesterday. Credit Saison Co. fell 7.7 percent, the most since the aftermath of the 2011 earthquake, after a gauge of consumer lenders jumped by the most since 2009. Okuma Corp., a machine-tools maker, jumped 8.9 percent after Credit Suisse AG raised its investment rating on the company.

The Topix Index (TPX) closed little changed at 1,102.04, with about three shares falling for every two that rose. The measure advanced 11 percent since April 2, the day before the Bank of Japan began a policy meeting which resulted in increased stimulus to boost the economy. The Nikkei 225 Stock Average closed little changed at 13,192.35, with volume 24 percent higher than its 30-day average.

“The yen has weakened beyond expectations and it’s going to be pretty good for company earnings,” said Tomomi Yamashita, a senior fund manager who helps oversee about 500 billion yen ($5 billion) at Shinkin Asset Management Co. in Tokyo. “It could be a good time to buy when shares decline. There’s a sense of being overbought on some shares.”

The yen weakened to as low as 99.66 per dollar today before trading at 99.14 at the close of Tokyo stock trading. Weakness in the yen, which hasn’t been at 100 per dollar since April 2009, is the result of policies to end deflation, Japanese Finance Minister Taro Aso said today.

Easing Measures

The Japanese currency has fallen about 2.8 percent against the dollar since Bank of Japan officials said on April 4 they will increase monthly bond purchases to 7.5 trillion yen ($75 billion). That exceeded the 5.2 trillion yen forecast by economists surveyed by Bloomberg. They also suspended a cap on some holdings and dropped a limit on debt maturities, while also setting a two-year horizon for their goal of 2 percent inflation.

The Topix has jumped 53 percent from mid-November as Prime Minister Shinzo Abe and central bank Governor Haruhiko Kuroda pledged to defeat 15 years of deflation. The gauge is trading at 1.3 times book value, compared with 2.3 for the Standard & Poor’s 500 Index and 1.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Return Reversal

Real-estate stocks, which are the biggest gainers since the day before the BOJ policy meeting began, led declines among the Topix Index’s 33 industry groups today, followed by consumer lenders after they surged 20 percent in the past five days.

Mitsubishi Estate slumped 5.3 percent to 3,025 yen, falling from highest level yesterday since November 2007. Mitsui Fudosan Co., Japan’s largest property developer by sales, slid 4.1 percent to 3,365 yen.

Consumer lender Credit Saison slumped 7.7 percent to 2,684 yen, the most on the Nikkei 225 (NKY), after surging 11 percent yesterday. Orix Corp., a Japanese financial-services provider, lost 5.4 percent to 1,410 yen after closing at its highest level since September 2008 yesterday.

“Stocks that had risen too quickly, such as real estate, are ricocheting but it’s a healthy adjustment,” said Hidehiro Tomioka, who overseas about $1.3 billion as head of equity investment at Manulife Asset Management Japan Ltd. “The 2 percent inflation target set by the BOJ will be hard to reach with the stimulus measures they have now, so we can expect some additional stimulus in the future. Stocks may rise another 30 percent within the year.”

Gainers

Among stocks that rose, Okuma jumped 8.9 percent 760 yen, posting the biggest advance on the Nikkei 225. Fanuc Corp., the world’s largest maker of controls that run machine tools, gained 2.8 percent to 15,160 yen. Fanuc’s share price momentum will pick up in tandem with a recovery in machine tool orders, Credit Suisse wrote in a note yesterday, while also raising its investment rating on Okuma to neutral from underperform.

The Nikkei Stock Average Volatility Index fell 0.5 percent to 29.64 today, indicating traders expect a swing of about 8.5 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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