Topix Caps Worst Week Since June on Yen, Tech Selloff

Photographer: Kiyoshi Ota/Bloomberg

Pedestrians walk in front of an electronic stock board outside a securities firm in Tokyo. The Topix sank 1.2 percent to 1,136 as of 10:53 a.m. in Tokyo. The gauge has fallen 6.6 percent this week, headed for the biggest such loss since June. Close

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Photographer: Kiyoshi Ota/Bloomberg

Pedestrians walk in front of an electronic stock board outside a securities firm in Tokyo. The Topix sank 1.2 percent to 1,136 as of 10:53 a.m. in Tokyo. The gauge has fallen 6.6 percent this week, headed for the biggest such loss since June.

Japan’s Topix index fell for a sixth day, capping its biggest weekly slump since June, after the yen rose yesterday and a selloff in technology stocks resumed. Fast Retailing Co. tumbled.

“As market sentiment worsens in the U.S., investors tend to focus on negatives, creating a downward spiral,” said Juichi Wako, a Tokyo-based equity strategist at Nomura Holdings Inc., the nation’s biggest brokerage. “We’re seeing a necessary correction in technology shares.”

SoftBank Corp., a mobile-phone operator and the largest investor in online-portal site Yahoo Japan Corp., was the biggest drag on the Topix today. Yahoo Japan slid 2.1 percent. Fast Retailing tumbled 7.9 percent, extending its weekly drop to 13 percent, after Asia’s biggest clothing retailer cut its forecast for annual profit as costs rise and demand weakens for the company’s casual wear in Japan. Nissan Motor Co., a carmaker that gets about 80 percent of revenue abroad, lost 1.4 percent.

The Topix (TPX) sank 1.3 percent to 1,134.09 in Tokyo, its lowest close in seven months. The gauge has fallen 6.7 percent this week, the biggest such loss since June. The Nikkei 225 Stock Average slid 2.4 percent today to 13,960.05, dragged down by Fast Retailing, its heaviest-weighted constituent. The measure’s 7.3 percent decline this week is its largest since the five days after the March 2011 earthquake. The yen fell 0.3 percent today to 101.81 per dollar after climbing 0.5 percent yesterday.

The Topix slumped 7.6 percent in the quarter ended March, the worst performance in the developed world, as the yen strengthened and concern grew that an April 1 sales-tax increase would stall Japan’s economy.

Lower Outlook

Fast Retailing tumbled 7.9 percent to 33,820 yen, its steepest drop since June 13. The company pared its profit outlook after spending more on salaries and expanding overseas to boost sales as the tax increase damps demand.

Net income will be about 88 billion yen ($865 million) for the year ending August, lower than its previous forecast of 92 billion yen, the Yamaguchi, Japan-based company said yesterday after the market closed. That compares with a 94.5 billion yen average of 19 analyst estimates compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today after the equity measure tumbled 2.1 percent yesterday. The Nasdaq Composite Index slumped 3.1 percent, the most since 2011, amid concern valuations may be too high at the start of earnings season. The Nasdaq Biotechnology Index plunged 5.6 percent.

‘How Vulnerable’

“This week’s move shows how vulnerable Japanese stocks are to overseas conditions because there’s a lack of domestic players,” said Akihiro Tsunoda, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co. “We are paying more attention to the earnings outlooks for Japanese companies than usual because of the tax increase. I have a feeling that they will put forward conservative estimates.”

Foreign investors accounted for 66 percent of Japanese stock transactions in the week ended April 4, according to data from the Tokyo Stock Exchange.

SoftBank lost 3.8 percent to 6,900 yen, sliding 13 percent this week. Nomura cut its target price on the company’s shares to 10,740 yen from 10,880 yen. Yahoo Japan declined 2.1 percent to 467 yen. Rakuten Inc. slipped 2.2 percent to 1,274 yen.

Exporters retreated after the yen surged yesterday. Nissan fell 1.4 percent to 904 yen. Komatsu Ltd. (6301), a maker of construction machinery that depends on overseas markets for 80 percent of its revenue, dropped 1.2 percent to 2,128 yen.

Aisin Seiki Co. sank 2.6 percent to 3,435 yen. The car-parts maker is among suppliers involved in Toyota Motor Corp.’s recall of more than 6 million vehicles, a person familiar with the matter said. The company made the seat rails and will discuss the costs with Toyota, the person said, asking not to be identified because the discussions are private. Toyota fell for a seventh day, sliding 0.1 percent to 5,314 yen to cap an 8.3 percent drop for the week.

The Topix traded at 1.11 times book value today, compared with 2.56 for the S&P 500 and 1.87 for the Stoxx Europe 600 Index yesterday. Trading volume on the Japanese gauge was 9.7 percent higher than the 30-day average.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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

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