Japanese Shares Fall as Sony, Mitsui Chemicals Decline

Japanese shares fell, with the Topix index (TPX) paring its weekly advance, as earnings reports and forecasts by companies from Sony Corp. to Mitsui Chemicals Inc. disappointed investors.

Electronics exporter Sony and Mitsui Chemicals tumbled at least 8.1 percent after cutting earnings outlooks. Ricoh Co. fell 6.7 percent after the maker of printers and digital cameras reported operating profit that missed its forecast. Panasonic Corp., the maker of Viera televisions, jumped 6.2 percent after doubling its net-income outlook. Sumitomo Heavy Industries Ltd., which makes machinery and ships, surged 7.6 percent as operating profit beat analyst estimates.

The Topix slipped 0.9 percent to 1,183.03 at the close of trading in Tokyo, trimming this week’s gain to 0.4 percent. All but four of the 33 industry groups retreated. The Nikkei 225 Stock Average lost 0.9 percent to 14,201.57. The yen strengthened 0.5 percent to 97.92 per dollar.

“The winners and losers of this earnings season are becoming clear to see, and their share prices are reacting pretty extremely,” said Seiichiro Iwamoto, who helps oversee the equivalent of $33 billion at Mizuho Asset Management Co. “Optimism about across-the board benefits from a weaker yen is starting to wane, and now it’s about which companies can truly push forward on their own merits.”

The Topix was October’s worst performer among 24 developed markets tracked by Bloomberg, rising 0.01 percent. Japanese shares are still the biggest gainers among the markets in 2013 amid optimism Prime Minister Shinzo Abe’s policies and unprecedented monetary easing from the Bank of Japan will lead the country out of deflation. The Standard & Poor’s 500 Index gained 4.5 percent last month, with the Stoxx Europe 600 Index up 3.8 percent.

Sales Surprise

The Topix traded at 1.23 times book value today, compared to 2.55 for the S&P 500 yesterday.

More than 1,100 companies on the 1,744-member Topix announce results in the two weeks through Nov. 7, the peak for earnings season, according to data compiled by Bloomberg. Of the 385 that have reported this quarter and for which Bloomberg had estimates, 61 percent posted sales that beat expectations.

Earnings per share for companies on the gauge are expected to increase 41 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

Sony plunged 11 percent to 1,668 yen, the biggest single drag on the Topix. The company unexpectedly lowered its full-year profit forecast by 40 percent on stalling demand for TVs and digital cameras, and as films flopped at the box office.

Mitsui Chemicals dropped 8.1 percent to 239 yen, its biggest decline since May 23 and the second-biggest drop on the Nikkei 225. The company slashed its net income forecast for the year by 80 percent to 1 billion yen, while also reducing its operating profit outlook by 11 percent.

Ricoh Tumbles

Ricoh (7752) declined 6.7 percent to 964 yen, the most since June, after operating profit of 45.9 billion yen missed its own forecast of 56 billion yen.

Panasonic jumped 6.2 percent to 1,046 yen, its highest close since April 2011, after doubling its net income forecast to 100 billion yen, with sales projected to rise to 7.4 trillion yen.

Sumitomo Heavy surged 7.6 percent to 466 yen, the biggest jump on the Nikkei 225. The company posted operating profit of 8.4 billion yen for the first half of this fiscal year, beating the 5.6 billion yen average estimate of three analysts compiled by Bloomberg.

Seiko Epson Corp. soared 25 percent after the printer maker more than doubled its full-year net-income outlook.

Futures on the S&P 500 gained 0.2 percent today. The measure dropped 0.4 percent yesterday, capping its first two-day slide in three weeks, on speculation the Federal Reserve will scale back stimulus in coming months.

The Topix’s 30-day historic volatility was at 16.37 today, down from its five-year median of 19.18. Volume was 4.2 percent above the 30-day average today.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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