Topix Reverses Gains Amid Low Volume on Paper Companies

Japan’s Topix index dropped in thin trading, reversing earlier gains, as paper companies and brokerages led the decline.

A Topix (TPX) gauge tracking paper companies sank 2.9 percent and a measure of brokerages lost 1.9 percent. Yaskawa Electric Corp. slumped 5.1 percent, the most on the Nikkei 225 Stock Average, after the servomotor manufacturer forecast full-year profit that missed analysts’ estimates. Bridgestone Corp. led tiremakers higher after Goldman Sachs Group Inc. reiterated its bullish stance on the sector.

The Topix lost 0.8 percent to 1,162.50 at the close in Tokyo after gaining as much as 0.6 percent. All but two of the gauge’s 33 industry groups retreated, with volume 22 percent lower than the 30-day average. The Nikkei 225 slipped 0.9 percent to 14,388.77. The yen rose 0.2 percent to 102.42 per dollar after falling 0.2 percent yesterday. Short sales comprised 34 percent of total trading on the Tokyo Stock Exchange yesterday.

“The market had low volume and didn’t rise much after short-covering,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. “Those who bought in the morning simply shifted to selling toward the close.”

About 160 companies on the Topix are due to post results this week, according to data compiled by Bloomberg. The gauge lost 3.4 percent this month after Japan’s sales tax rose on April 1. The Topix traded at 1.14 times book value today, compared with 2.61 for the Standard & Poor’s 500 Index and 1.87 for the Stoxx Europe 600 Index yesterday.

Futures on the S&P 500 fell 0.1 percent today. The equity measure rose for a fifth day yesterday amid improving corporate earnings, capping its longest rally since October.

GPIF Reshuffle

Japan’s government pension fund overhauled its investment committee, adding three members of a state panel that urged it to cut bonds, as the balance of power shifts at the world’s biggest manager of retirement savings.

Yasuhiro Yonezawa, who sat on the group handpicked by Prime Minister Shinzo Abe that recommended a strategy and governance revamp at Japan’s 128.6 trillion yen ($1.26 trillion) Government Pension Investment Fund, will join the committee, the health ministry said. Yonezawa is expected to be named head, according to news reports. Sadayuki Horie and Isao Sugaya were also appointed, with only two of 10 previous members remaining and the committee’s size reduced to eight.

U.S. President Barack Obama meets with Japanese Prime Minister Shinzo Abe this week, arriving in Tokyo tomorrow and then traveling to South Korea, Malaysia and the Philippines.

An agreement to ease tensions in Ukraine showed signs of crumbling as the U.S. and Russia traded blame as Vice President Joe Biden meets government leaders in the Black Sea country.

Paper Companies

Oji Holdings Corp., Japan’s biggest paper company by market value, slid 2.7 percent to 436 yen. Nippon Paper Industries Co. (3863), ranked No. 2, dropped 4.2 percent to 1,883 yen. Daio Paper Corp. lost 4.2 percent to 1,083 yen.

IwaiCosmo Holdings Inc. declined 5.2 percent to 1,086 yen, while Kosei Securities Co. dropped 4.2 percent to 207 yen. The two brokerages fell the most on the Topix Securities Index.

Yaskawa plunged 5.1 percent to 1,260 yen, the biggest drop since Jan. 24. The company forecast annual net income will rise to 17.5 billion yen. Analysts had expected 20.5 billion yen.

Tiremakers advanced after Goldman Sachs said a drop in rubber prices is likely to boost their profitability this quarter. Bridgestone added 2.5 percent to 3,612 yen and Sumitomo Rubber Industries Ltd. rose 1.7 percent to 1,432 yen.

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

To contact the editors responsible for this story: Tom Redmond at tredmond3@bloomberg.net Jim Powell

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