Japan Shares Slump Most Since August as Yen Extends Gains

Japanese stocks fell, with the Topix (TPX) index slumping the most in more than two months, as the yen extended gains against the dollar and exporters slid.

Toyota Motor Corp. (7203), Asia’s largest car manufacturer, fell 2.1 percent. SoftBank (9984) Corp., a mobile-phone company, lost 4.8 percent after a report Alibaba Group Holding Ltd. abandoned plans for an initial public offering in the near term. SoftBank said in July it holds a stake of about 37 percent in Alibaba. Canon Inc., the world’s biggest camera maker, slipped 1.6 percent after cutting its profit forecast. JFE Holdings Inc., Japan’s second-biggest steelmaker, slumped 4.2 percent after its net-income outlook missed estimates.

The Topix dropped 2.1 percent to 1,178.28 at the close in Tokyo, its biggest decline since Aug. 7, with all 33 subsectors sliding. The gauge fell 2.3 percent this week. The Nikkei 225 Stock Average sank 2.8 percent to 14,088.19, with just five companies rising. Nikkei 225 futures traded in Osaka slumped 2.5 percent. The yen touched a two-week high against the dollar.

“Short-term traders like hedge funds are adjusting their positions and that’s impacting the market,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co. “Futures led the cash market lower, the yen’s gain followed and that caused a further drop in shares.”

The Topix has lost 1.3 percent this month, trailing all its 23 developed-market peers. Japanese shares are still the best performers this year among the markets amid optimism Prime Minister Shinzo Abe’s policies and unprecedented monetary easing from the Bank of Japan will lead the country out of deflation.

Consumer prices excluding fresh food in the nation rose 0.7 percent from a year earlier last month, meeting the median estimate of economists surveyed by Bloomberg. Stripping out energy costs as well, prices were unchanged from a year ago, ending four years of declines and signaling progress in the prime minister’s campaign to overcome deflation.

Exporters Tumble

Exporters declined as the yen advanced. Toyota fell 2.1 percent to 6,200 yen. Bridgestone Corp. (5108), a tiremaker that gets 43 percent of revenue in the Americas, lost 2.3 percent to 3,365 yen. Sony Corp., a TV maker that gets 16 percent of its sales in the U.S., slipped 1.1 percent to 1,851 yen.

SoftBank slid 4.8 percent to 7,400 yen, the most on the Nikkei 225, after the South China Morning Post reported that Alibaba has abandoned plans to sell shares in the near term. The Chinese company aims to “let the heat die down over its controversial share-structure proposal,” the newspaper reported, citing chief executive Jonathan Lu Zhaoxi.

About 630 companies on the 1,744-member Topix report results from today through Nov. 1, with earnings season peaking next week, according to data compiled by Bloomberg. Profit per share for companies on the gauge is expected to increase 56 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

JFE Slides

JFE slumped 4.2 percent to 2,350 yen after saying it expects full-year net income of 95 billion yen, below the average estimate of 131.3 billion yen of 19 analysts surveyed by Bloomberg. The company forecast operating profit of 155 billion yen, while analysts expected 211.2 billion yen.

Canon lost 1.6 percent to 3,080 yen after saying yesterday that net income will probably total 240 billion yen ($2.5 billion) for the year ending December, cutting its earlier forecast of 260 billion yen. The new projection missed the 250.8 billion-yen average of 21 analyst estimates compiled by Bloomberg.

“Canon’s earnings are drawing attention, causing speculators to sell stocks,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of 4.94 trillion yen. “Canon is bad, but I think overall earnings are rather good. As we see more results come out next week, I think stocks will rise.”

Higher Forecast

Among stocks that rose, Mitsubishi Motors Corp. gained 1.2 percent to 1,036 yen, the most on the Nikkei 225. The automaker raised its full-year net-income forecast by 40 percent to 70 billion yen.

Murata Manufacturing Co., a maker of electronic components, added 2.2 percent to 7,760 yen after reporting preliminary first-half net income of 47 billion yen, exceeding its forecast of 33 billion yen. The company’s final results are due Oct. 31.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent today. The equity gauge added 0.3 percent in New York yesterday as corporate earnings beat estimates and signs of slower economic growth fueled bets the Federal Reserve will maintain stimulus.

The Topix traded at 1.23 times book value today, compared with 2.56 for the S&P 500 and 1.8 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 16.2 today after falling to its lowest since January yesterday.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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

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