Toyota Motor Corp. (7203) slumped 2.5 percent, its biggest drop since July 29, contributing the most to the Topix’s decline. Daihatsu Motor Co., which counts Indonesia as its largest overseas source of revenue, tumbled 6 percent after the Southeast Asian country’s current-account deficit widened to a record last quarter. Airport Facilities Co. climbed 3.7 percent, extending yesterday’s surge after a report the government plans a strategic zone to support businesses near Haneda Airport.
Equities slumped from Tokyo to Sydney, Jakarta and Mumbai on concern that economies are weakening across the Asia-Pacific region and the Federal Reserve will reduce its unprecedented stimulus as soon as next month. The Topix sank 2.1 percent to 1,125.27 in Tokyo, its lowest close since June 27. The Nikkei 225 Stock Average declined 2.6 percent to 13,396.38.
“You can’t isolate Japan when you get a risk-off environment,” said Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd., which manages more than $130 billion. Still, “Japan can outperform, helped by a weaker yen.”
Japanese shares have led gains among developed markets in 2013 amid optimism that record stimulus by the Bank of Japan and Prime Minister Shinzo Abe’s economic reforms will boost growth. The yen has retreated 11 percent against the greenback this year. The Topix dropped about 12 percent from its May 22 close, which was the highest since 2008.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The measure yesterday capped its first four-day decline this year as energy shares slumped and investors awaited signals this week on the Federal Reserve’s stimulus plans.
The Federal Open Market Committee will release minutes of its July 30-31 meeting on Aug. 21. Investors and analysts will be looking for clues on when central bankers plan to reduce $85 billion in monthly asset purchases. Officials will begin to trim buying at their Sept. 17-18 meeting, according to 65 percent of economists surveyed by Bloomberg on Aug. 9-13.
“The market is starting to price in the likelihood of tapering by the U.S. Fed,” Toshihiko Matsuno, a strategist at Tokyo-based SMBC Friend Securities Co., a unit of Japan’s second-biggest lender by market value, said by telephone. “However, there is still optimism for Japan’s economy exiting deflation.”
Exporters fell as the yen strengthened against the dollar for the first time in three days. Toyota dropped 2.5 percent to 6,160 yen, the biggest single drag on the Topix. Honda Motor Co., the second-biggest drag, slid 4.1 percent to 3,645 yen. Sony Corp. lost 2.4 percent to 1,927 yen.
The Topix Mining Index declined 2.9 percent, its biggest drop since July 29, as crude oil fell for a second day after snapping the longest advance in almost four months. Inpex Corp. (1605), Japan’s biggest energy explorer, sank 3.2 percent to 426,000 yen. Japan Petroleum Exploration Co. slid 2.5 percent to 4,270 yen and Japan Drilling Co. decreased 1.9 percent to 6,640 yen.
An investor exodus from emerging markets that pushed Indonesian equities into a bear market also drove some Japanese shares lower. Indonesia’s currency, stocks and bonds plunged after the current-account deficit widened to a record last quarter. The Jakarta Composite Index has dropped 22 percent from its record closing high on May 20.
Daihatsu, which gets 22 percent of its sales from Indonesia, slumped 6 percent to 1,883 yen today. Suzuki Motor Corp., which gets about 38 percent of sales from Asia including Indonesia, sank 8 percent to 2,224 yen.
“Exporters with a high exposure to emerging markets such as Indonesia and China are in a situation where they’re going to be easily sold-off,” said Koji Uchida, chief fund manager at Mitsubishi UFJ Asset Management Co. in Tokyo.
Just 1.4 billion shares traded hands on the first section of Japan’s stock exchange yesterday, the lowest level this year. About 2 billion shares were traded today, below the 3.5 billion average for 2013 as investors take summer vacations. The measure’s 30-day historic volatility was at 25.87, compared with its five-year median of 19.42.
Among stocks that rose, Airport Facilities, which builds and leases aircraft hangars, climbed 3.7 percent to 765 yen after rising as much as 19 percent during the day, the most on record. The shares surged 16 percent yesterday after the Sankei newspaper reported Japan is considering the strategic zone near Haneda airport to help small and medium-sized manufacturers and advanced medicine businesses, and to promote exports of Japan’s pop culture such as animation.
The Topix traded at 1.18 times book value yesterday, compared with 2.42 for the S&P 500 and 1.71 for the Stoxx Europe 600 Index.
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