Most Japan Shares Fall as Investors Await U.S. Payrolls

Most Japanese shares fell amid thin trading, with the Topix (TPX) index closing little changed to cap a weekly advance, as investors weighed earnings and awaited U.S. employment data.

Sony Corp. pared losses of as much as 4.5 percent to end down 0.6 percent. The maker of Xperia smartphones and PlayStation consoles reported a wider preliminary net loss than projected. Utilities were the biggest drag on the Topix. IHI Corp. jumped 5.4 percent after activist investor Daniel Loeb’s Third Point LLC fund reported holding a stake in the heavy-machinery maker. Oki Electric Industry Co. climbed 3.4 percent on a report full-year profit doubled.

About nine shares fell for every seven that rose on the Topix, which closed at 1,182.48 in Tokyo to cap a 1.1 percent increase for the week. Volume was 18 percent lower than the 30-day average. The Nikkei 225 Stock Average dropped 0.2 percent to 14,457.51. Japanese markets are shut May 5-6 for holidays.

“The U.S. economy is in focus tonight with the payrolls number coming up,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “It’s recovering much more slowly than previous cycles and that’s a drag on investor confidence. People in Japan are also very cautious ahead of the holidays.”

Futures on the Standard & Poor’s 500 Index added less than 0.1 percent after the U.S. equity measure closed little changed yesterday. A Labor Department report today may indicate employers added 215,000 workers in April, the most since November, according to economists’ projections.

Corporate Earnings

Reporting season continues in Japan. More than 200 Topix members released earnings this week, with more than 500 filing next week. Of those on the gauge that have already posted results and for which Bloomberg has estimates, 66 percent beat analyst predictions for sales while 60 percent topped profit projections.

“Companies that look like they can feasibly achieve their forecasts are being bought,” said Nobuhiko Kuramochi, head of investment information at Mizuho Securities Co.

Sony lost 0.6 percent to 1,800 yen. The company posted a preliminary net loss of 130 billion yen ($1.3 billion) for the 12 months ended March, its third downward revision after a February loss projection of 110 billion yen, itself a reduction from a revised October forecast for profit of 30 billion yen.

Oki Electric

Oki Electric gained 3.4 percent to 213 yen. Net income for the fiscal year ended March is likely to be about 27 billion yen after the company’s printer business showed improvement, the Nikkei newspaper reported. Oki Electric is due to report earnings on May 8.

IHI jumped 5.4 percent to 430 yen. Third Point’s Loeb reported holding a stake in the company in a letter to investors, saying it sees the intrinsic value of IHI at more than 1,000 yen per share. Third Point also said earnings at IHI’s jet-engine business are set to grow “dramatically.”

The Topix Electronic Power & Gas Index lost 1.5 percent, the biggest decline among the 33 industry groups on the broader gauge. Kansai Electric Power Co. slumped 2.5 percent to 893 yen after yesterday’s 7 percent gain. Shikoku Electric Power Co. sank 2.5 percent to 1,222 yen.

The Topix traded at 1.16 times book value today, compared with 2.64 for the S&P 500 and 1.89 for the Stoxx Europe 600 Index yesterday. The Japanese gauge has tumbled 9.2 percent this year, the most among 24 developed markets tracked by Bloomberg, as the yen gained and investors weighed a sales-levy increase in April.

“I’ve just added to my Japan positions again,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $131 billion. “The tax increase is out of the way, and the Japanese market looks very oversold. My strategy for Japan has been buying into weakness, which is what we have now.”

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: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond, John McCluskey

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