Topix Holds Drop as BOJ Keeps Pledge; Shiseido Declines

Japanese shares fell, with the Topix Index (TPX) retreating from a 4 1/2 year high, as earnings reports from Shiseido Co. and Advantest Corp. (6857) disappointed investors. The gauge extended declines after the Bank of Japan repeated its pledge to double the monetary base in two years.

Shiseido Co., Japan’s biggest cosmetics maker, tumbled the most on the Nikkei 225 Stock Average after cutting its dividend for the first time since listing. Advantest dropped 7.9 percent after the maker of chip testers posted an unexpected loss on falling computer demand. Japan Tobacco (2914) Inc., Asia’s No.1 listed cigarette maker, gained 2.7 percent after saying profit will rise to a record this year on a weaker yen.

“We didn’t get anything new from the BOJ and that’s exactly what was expected,” said Ichiro Yamada, who helps oversee about 300 billion yen ($3 billion) in stocks as general manager at Fukoku Mutual Life Insurance in Tokyo. “Earnings so far haven’t been quite as good as share prices would warrant because best-case scenarios have been built in.”

The Topix Index lost 1 percent to close at 1,161.19 in Tokyo. The gauge advanced 62 percent since mid-November through yesterday, when it closed at its highest since September 2008, as Prime Minister Shinzo Abe and BOJ Governor Haruhiko Kuroda pledged to beat deflation, and the central bank this month said it would double bond purchases. The Nikkei 225 Stock Average lost 0.3 percent to 13,884.13 today.

Deflation Fight

Shares on the Topix trade at 1.3 times book value compared with 2.3 for the Standard & Poor’s 500 Index and 1.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The BOJ kept its pledge to expand the monetary base and predicted inflation will almost match its 2 percent target in two years even after a report earlier highlighted deflation’s grip. Consumer prices excluding fresh food slid 0.5 percent in March from a year earlier, the statistics bureau said today.

Of the companies that have reported earnings so far this month and for which Bloomberg has estimates, 98 companies have beaten analyst projections and 87 have fallen short, according to Bloomberg data.

Shiseido, Advantest and NEC Corp. posted the biggest declines on the Nikkei 225 today. All but three of the 33 Topix industry groups declined, with more than four stocks falling for each that rose on the 1,698-member index.

Shiseido, the maker of toiletries and owner of U.S. cosmetics brand Bare Escentuals, slumped 8.3 percent to 1,390 yen after reducing its planned dividend by 60 percent following its first annual loss in eight years.

Advantest tumbled 7.9 percent to 1,412 yen, its biggest drop since July last year, after posting a net loss of 3.8 billion yen versus a 333 million yen profit estimate of analysts surveyed by Bloomberg.

NEC Corp. dropped 7.5 percent to 271, its sharpest drop since May, after the Nikkei newspaper said operating profit at the maker of mainframe computers will fall this year.

Cigarette Sales

Among stocks that rose, Japan Tobacco gained 2.7 percent to 3,595 yen to reach its highest ever. The cigarette maker forecast 415 billion yen in net income this fiscal year, beating the 412 billion yen average of 18 analyst estimates compiled by Bloomberg and its highest on record. The weaker yen is boosting the value of overseas revenue, which accounted for about 48 percent of the company’s total in the last fiscal year.

The Nikkei Stock Average Volatility Index fell 0.3 percent to 25.72 today, indicating traders expect a swing of about 7.4 percent on the benchmark gauge over the next 30 days. Volume on the gauge was 14 percent below its intraday 30-day average.

Markets will be closed on April 29 for a public holiday.

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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