Topix Declines for Third Day as Yen Climbs, Takeda Slumps

Japan’s Topix index fell for a third day, posting its biggest decline in three weeks, as the yen strengthened and health-care and Internet stocks tumbled.

Takeda Pharmaceutical Co. plunged 5.2 percent after being ordered by a U.S. jury to pay $6 billion in punitive damages over claims it hid the cancer risks of its Actos diabetes medicine. SoftBank Corp. dropped 4.5 percent while Yahoo Japan Corp. sank 3.3 percent, extending a selloff in technology shares. Honda Motor Co., a carmaker that gets more than 80 percent of sales overseas, slid 3.2 percent as the yen rose for a third day against the dollar.

The Topix lost 1.9 percent to 1,174.56 at the close in Tokyo, its largest decline since March 14. All 33 industry groups retreated. The Bank of Japan today refrained from boosting stimulus, as expected by economists. The Nikkei 225 Stock Average slid 1.4 percent to 14,606.88. The Nasdaq 100 Index of the largest U.S. technology stocks yesterday capped its steepest three-day drop since 2011.

“I think hedge funds are piling up short positions on bets there’ll be no additional easing by the BOJ, not just today but also down the road,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. “That’s my scenario.”

Japan’s central bank today left unchanged a 60 trillion yen to 70 trillion yen ($680 billion) target for yearly expansion of the monetary base in its first meeting after the nation’s sales tax increased to 8 percent from 5 percent on April 1. The economy has continued to recover moderately, “albeit with some fluctuations due to the consumption-tax hike,” the BOJ said.

Stimulus Outlook

Forty-four percent of economists in a Bloomberg News survey before today’s decision forecast the BOJ will increase monetary stimulus in July. Analysts polled said the bank will probably double purchases of exchange-traded funds when it conducts its next round of easing.

The yen rose 0.2 percent to 102.91 per dollar. Japan’s current account rebounded to a 612.7 billion yen surplus in February from a record deficit in January, data showed today. Honda lost 3.2 percent to 3,455 yen. Panasonic Corp., an electronics maker that gets about half its revenue abroad, slid 2.8 percent 1,129 yen.

Futures on the Standard & Poor’s 500 Index added 0.3 percent. The equity measure dropped 1.1 percent yesterday, erasing this year’s gain. Technology shares were hit as traders dumped the biggest winners of the bull market amid concern valuations have advanced too far.

Technology Shares

SoftBank lost 4.5 percent to 7,217 yen, its lowest close since Feb. 5. Yahoo Japan sank 3.3 percent to 469 yen, while Rakuten Inc., an online retailer, declined 2.1 percent to 1,321 yen after sliding 4.9 percent yesterday.

Takeda slumped 5.2 percent to 4,572 yen. Takeda and Eli Lilly & Co. were ordered to pay a combined $9 billion in the first U.S. trial of its kind after a federal court jury found they hid the cancer risks of their Actos diabetes medicine to protect billions of dollars in sales.

Takeda, Asia’s largest drugmaker, faces the Actos claims after it scrapped development of another diabetes drug this year when research linked it to liver damage. More than 2,700 Actos suits have been consolidated before U.S. District Judge Rebecca Doherty in Louisiana for pretrial information exchanges, according to court dockets. Takeda will challenge the outcome, said Kenneth D. Greisman, senior vice president and general counsel at the drugmaker.

The Topix (TPX) traded at 1.15 times book value today, compared with 2.58 for the S&P 500 and 1.88 for the Stoxx Europe 600 Index yesterday. The Nasdaq 100 traded at 4.08 times the value of its net assets yesterday. Volume on the Japanese gauge was 9.8 percent lower than the 30-day intraday average today.

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

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond, Jim Powell

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