Topix Falls as Earnings Disappoint, Yen Gains on Ukraine

Japan’s Topix index fell, poised for its fourth straight monthly loss, on disappointing earnings reports and as the yen held gains against the dollar amid escalating tensions over Ukraine.

Japan Exchange Group Inc. tumbled 6.2 percent after the bourse operator projected net income that missed analysts’ estimates. Honda Motor Co. capped its biggest drop in almost three months after the carmaker’s profit forecasts trailed estimates. Japan Display Inc., a supplier of screens to Apple Inc., tumbled 16 percent after preliminary operating profit and sales trailed its forecasts. NTT Docomo Inc. jumped 3.7 percent after Japan’s largest mobile-phone company by subscribers announced plans to buy back as much as 500 billion yen ($4.9 billion) in shares.

The Topix declined 0.8 percent to 1,160.74 at the close in Tokyo, with all but two of the 33 industry groups dropping. The measure is headed for a 3.5 percent loss this month. The Nikkei 225 Stock Average slid 1 percent today to 14,288.23. The yen fell less than 0.1 percent to 102.24 per dollar after three days of gains.

“Momentum stocks are starting to crumble across the board,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “Shares of companies that don’t achieve their forecasts are collapsing and it’s getting hard to picture a scenario where earnings point to good fundamentals and stocks rise.”

The U.S. and European Union will impose additional sanctions as early as today on Russian companies and individuals close to President Vladimir Putin amid the mounting crisis in Ukraine, officials said.

Asset Freezes

Representatives of the 28 EU nations will meet today to widen a list of individuals subject to asset freezes and travel bans, an official from the bloc said over the weekend. The seizure of international inspectors by pro-Russian separatists last week added pressure to a confrontation made urgent by Russian military exercises on Ukraine’s frontiers.

Futures on the Standard & Poor’s 500 Index climbed 0.1 percent today. The measure lost 0.8 percent on April 25 while the Nasdaq Composite Index posted its biggest decline in two weeks on concern earnings growth is too slow to justify valuations. Amazon.com Inc. tumbled after predicting an operating loss this quarter.

Technology-related shares in Japan followed U.S. losses. SoftBank Corp. sank 2.4 percent to 7,550 yen. Yahoo Japan Corp. slumped 6.2 percent to 470 yen after reporting net income that missed the online portal-site operator’s own forecast.

“The tech weakness is spreading universally now,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., which oversees the equivalent of $32.1 billion. “We can’t be too hopeful about Japanese earnings. There’s concern that sales volumes abroad won’t increase. We have to think about negative growth.”

Earnings Reports

More than 200 companies on the Topix will release earnings this week. Of those on the gauge that have already posted results and for which Bloomberg has estimates, 59 percent beat analyst predictions for sales while 58 percent topped earnings-per-share projections.

Japan Exchange tumbled 6.2 percent to 2,062 yen, its biggest loss since August. The company’s 21 billion yen net-income target for the year ending March 2015 fell short of the 32.5 billion yen projection in a Bloomberg survey.

Honda dropped 4.5 percent to 3,315 yen, its biggest daily loss since Feb. 4. The automaker forecast net income of 595 billion yen for the year ending March 2015, below the 693 billion yen average estimate of 19 analysts compiled by Bloomberg.

Japan Display

Japan Display sank 16 percent to 672 yen, its lowest close since going public last month. The company posted operating profit of 27.2 billion yen in the 12 months ended March, compared with its earlier projection of 30.4 billion yen.

NTT Docomo jumped 3.7 percent to 1,631 yen. The company said it will buy back as many as 320 million of its outstanding shares, or about 7.7 percent, through a repurchasing plan and also sell a stake in Tata Teleservices Ltd. in India. The Japanese carrier’s rating was raised to outperform from neutral at SMBC Nikko Securities Inc.

The Topix (TPX) traded at 1.13 times book value today, compared with 2.61 for the S&P 500 and 1.88 for the Stoxx Europe 600 Index on April 25. Volume on the Japanese equity gauge was 20 percent lower than the 30-day average today.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Yuko Takeo in Tokyo at ytakeo2@bloomberg.net

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

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