Japan Stocks Drop as Yen Hits Exporters, Materials Slide

Japanese stocks fell, with the Nikkei 225 Stock Average declining for the fourth time in five days, as the yen’s gain weighed on exporters and a drop in commodities led mining and energy shares lower.

Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, slid 2.2 percent. Inpex Corp. (1662), Japan’s No. 1 energy explorer, slid 2.5 percent. Murata Manufacturing Co., a maker of parts for Apple Inc.’s iPhone, lost 2.9 percent after audio-chip maker Cirrus Logic Inc. reported an inventory glut that suggests sales of the smartphone may miss estimates. GS Yuasa Corp., a supplier of batteries to Boeing Co.’s Dreamliner, jumped 5.5 percent on a report the grounded plane may resume flights.

The Nikkei 225 dropped 1.2 percent to 13,220.07 at the close in Tokyo. The broader Topix (TPX) Index lost 1.2 percent to 1,122.97. The gauge last week climbed to the highest since September 2008, surging 11 percent in the six days after the Bank of Japan announced its most aggressive bond-buying plan.

“Japanese stocks have risen on expectations for monetary easing and that’s over now,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which manages about 10.2 trillion yen ($104 billion) in assets. “No wonder investors want to sell.”

The Topix surged 57 percent from mid-November through yesterday amid confidence Prime Minister Shinzo Abe and newly appointed BOJ Governor Haruhiko Kuroda would take steps to tackle deflation. The gauge traded at 17.1 times average estimated earnings, compared with 14 for the Standard & Poor’s 500 Index and 12.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Topix Forecast

Morgan Stanley says the Topix will fall to 1,020 in the near term as investors await corporate earnings and progress on promised economic reforms. It has a year-end estimate for the Topix of 1,270, compared with the average year-end estimate of 1,160 by analysts surveyed this month by Bloomberg.

Futures on the S&P 500 (SPX) were little changed. The gauge yesterday dropped 1.4 percent amid disappointing results by companies from Bank of America Corp. to Textron Inc. The Federal Reserve said yesterday in its Beige Book business survey that the U.S. economic expansion remained “moderate” amid gains in manufacturing, housing and autos that offset weakness in defense-related industries in some regions.

Exporters fell as the yen rose against most of its major counterparts. Toyota dropped 2.2 percent to 5,430 yen. Fanuc Corp. (6954), a maker of factory robots that gets 76 percent of its revenue outside Japan, declined 2.3 percent to 14,870 yen. Mitsubishi Corp. (8058), Japan’s biggest trading company, lost 1.9 percent to 1,722 yen.

Energy Shares

Japan’s exports rose 1.1 percent from a year earlier, the Finance Ministry said in Tokyo today. The trade deficit narrowed to 362.4 billion yen from 777.5 billion yen in February.

Energy and commodity suppliers fell after West Texas Intermediate crude fell, gold slumped and copper declined. Inpex dropped 2.5 percent to 477,000 yen, and smaller Japan Petroleum Exploration Co. lost 1.7 percent to 3,680 yen. Mitsubishi Materials Corp., Japan’s third largest copper producer, fell 2.2 percent to 263 yen.

Apple suppliers fell after U.S.-based Cirrus, a maker of audio components for the iPhone and iPad reported an inventory glut. Murata Manufacturing, which makes capacitors for Apple products, lost 2.9 percent to 7,910 yen in Osaka. Toshiba Corp., a supplier or memory chips, fell 3.7 percent to 540 yen after closing yesterday at its highest since October 2009.

GS Yuasa

Cirrus will record a net inventory reserve of $23.3 million for the three months through March, the company said yesterday. Most of that -- $20.7 million -- is from a high-volume product from one customer, it said, without naming the client. Apple accounts for more than 90 percent of Cirrus’s sales, according to supply chain estimates compiled by Bloomberg.

Among stocks that rose, GS Yuasa soared 5.5 percent to 404 yen after the Nikkei newspaper reported U.S. regulators plan to lift a ban on Boeing 787 flights as early as this month. The plane had been grounded because of problems possibly related to GS Yuasa’s lithium-ion batteries.

ANA Holdings Inc., the first airline to operate the Dreamliner, hasn’t decided on whether to resume the flights and is awaiting approval from the U.S. and Japan, spokesman Ryosei Nomura said by phone today. ANA added 3.6 percent to 204 yen.

Brokerages posted the second-biggest gain among the Topix’s 33 industries after data showed foreign investors last week bought the most Japanese stocks since at least 2001. Overseas buyers purchased a net 1.57 trillion yen in the shares, according to the Finance Ministry.

Daiwa Securities Group Inc. (8601), Japan’s second largest brokerage added 2.6 percent to 837 yen. Ichiyoshi Securities Co. added 7.7 percent to 1,376 yen.

The Nikkei Stock Average Volatility Index (VNKY) gained 0.4 percent to 25.92, indicating traders expect a swing of about 7.4 percent on the benchmark gauge over the next 30 days. Trading volume on the Nikkei 225 (NKY) was 18 percent above the 30-day average, according to data compiled by Bloomberg.

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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