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Japanese Shares Fall on Fed Taper Concern; Tepco Slumps

Japanese stocks fell, with the Topix index closing at the lowest level in almost eight weeks, as concern that the Federal Reserve will soon pare stimulus drove a slump in equities across Asia.

Tokyo Electric Power Co. (9501), owner of the crippled Fukushima Dai-Ichi nuclear plant, pared an earlier loss of 15 percent to decline 9.3 percent as a regulatory body said it would raise the severity of a leak of contaminated water at the plant. Kintetsu Corp., a passenger rail company, fell 6.4 percent on a share sale plan. Tokyo Electron Ltd. gained the most on the Nikkei 225 Stock Average on a report that its orders of semiconductor manufacturing equipment may rise this quarter.

The Topix swung between gains and losses today before dropping 0.3 percent to close at 1,121.74 in Tokyo, the lowest since June 27. About two stocks fell for each that gained on the measure. The Nikkei 225 rose 0.2 percent to 13,424.33. The Federal Open Market Committee will release minutes of its July 30-31 meeting today, with investors seeking clues on when the central bank will pare $85 billion in monthly asset purchases.

“Investors are cautious ahead of the Fed’s minutes as there’s ongoing concern tapering of quantitative easing will cause negative impacts,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about 6.1 trillion yen ($63 billion).

The MSCI Asia Pacific Index dropped for a fifth day while a gauge of emerging-market equities headed for the lowest close in six weeks.

U.S. Futures

Futures on the Standard & Poor’s 500 Index declined 0.1 percent today. The measure rose 0.4 percent yesterday, snapping a four-day losing streak.

Carmakers and utilities contributed the most to the Topix (TPX)’s loss among its 33 industry groups. Toyota Motor Corp., a carmaker that gets 31 percent of its revenue in North America, dropped 2.1 percent to 6,030 yen. Mazda Motor Corp., which depends on North America for about 30 percent of its revenue, declined 2.2 percent to 399 yen.

Tokyo Electric, known as Tepco, slumped 9.3 percent to 557 yen after Japan’s Nuclear Regulation Authority said the radioactive water leak is a three, or a ‘serious incident’ on the seven-level International Nuclear and Radiological Event Scale.

The Tepco risk had been priced in somewhat and its impact on broader market sentiment seems to have been limited, according to Kubo at Nissay Asset.

Share Sale

Kintetsu dropped 6.4 percent to 396 yen, the biggest decline in almost two years, after announcing a plan to raise as much as 78.3 billion yen in a share sale.

Japanese shares have led gains among developed markets this year amid optimism that record stimulus by the Bank of Japan and Prime Minister Shinzo Abe’s economic reforms will boost growth. Their relative performance has lagged in the past three months, with the Topix dropping about 12 percent from its May 22 close, which was the highest since 2008.

BOJ Governor Haruhiko Kuroda said the economy can expand an average 2 percent over the next three years and a scheduled sales tax increase won’t hurt growth, public broadcaster NHK reported. The central bank won’t hesitate to implement further monetary easing if risks of an economic slowdown heighten, the Mainichi newspaper reported, citing an interview with Kuroda.

Among shares that rose, Tokyo Electron gained 3.8 percent to 4,240 yen after the Nikkei newspaper reported semiconductor manufacturing equipment orders are expected to rise about 7 percent this quarter to 105 billion yen.

Sony Corp., an electronics maker that gets 16 percent of its revenue in the U.S., increased 0.5 percent to 1,937 yen after saying it plans to starts selling the PlayStation 4 in North America on Nov. 15.

The Topix traded at 1.17 times book value today, compared with 2.43 for the S&P 500 and 1.7 for the Stoxx Europe 600 Index yesterday.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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