Japan Stocks Fall After 4-Week Gain as Yen Rises on Iraq

Japanese stocks fell, after the Topix (TPX) index capped a fourth weekly advance, as the yen gained amid escalating violence in Iraq.

Honda Motor Co. (7267), a carmaker that gets about 80 percent of its revenue abroad, lost 1.3 percent. Ateam Inc., a digital-content manager, fell the most on the Topix after its nine-month profit plunged. Tokyo Electron Ltd., a maker of semiconductor-manufacturing machines, gained 2.5 percent after bellwether Intel Corp. soared on an improved sales forecast.

The Topix slid 0.8 percent to 1,234.68 at the close in Tokyo after rising 0.8 percent last week. All but one of gauge’s 33 industry groups declined today. The Nikkei 225 Stock Average sank 1.1 percent to 14,933.29. The yen rose 0.3 percent to 101.76 per dollar. Prime Minister Shinzo Abe said June 13 he aims to start cutting company taxes in 2015 and bring the rate under 30 percent in a few years.

The situation in Iraq “could lead to destruction of supply facilities in the second-largest oil producer, and if¼U.S. troops launch air strikes it may impact Japanese stocks,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. On Abe’s comments, “some people strongly expected that they would announce an actual corporate tax rate such as 25 percent or 29 percent.”

A lower levy is the centerpiece of Abe’s latest growth initiatives, which are now a focus of investor interest as the Bank of Japan appears further away from adding to unprecedented easing.

Topix Performance

Even after a 7.4 percent rebound from its May 21 low, the Topix is still the worst performer this year among 24 developed markets tracked by Bloomberg. The measure capped a world-beating rally last year as the central bank pressed ahead with record monetary easing.

The 25-day Toraku Index, which compares the numbers of advancing and declining stocks on the Topix, stayed above 120 the past three trading days, a level that signals to some investors that shares have climbed too far, too fast.

“Once investors see negative catalysts overseas, they get jumpy and sell,” said Koji Toda, chief fund manager at Resona Bank Ltd., Japan’s fifth-largest lender by market value. “They are cautious about chasing higher prices because the market has been overbought in the short term.”

Iraq Violence

Iraq’s army killed more than 279 rebels yesterday, as violence escalates with Sunni Muslim insurgents controlling territory north of Baghdad. Sectarian strife is pushing OPEC’s second-largest oil producer closer to civil war, three years after the U.S. withdrew its forces from the country.

Exporters fell as the yen advanced. Honda dropped 1.3 percent to 3,511 yen. Panasonic Corp. (6752), an electronics maker that gets half its revenue overseas, slid 1.5 percent to 1,182 yen.

Ateam slumped 12 percent to 6,330 yen after its net income plunged 27 percent to 592 million yen ($5.8 million) in the nine months ended April 30.

Kobe Bussan Co. slumped 3.9 percent to 2,969 yen after the supermarket operator’s first-half profit plunged 44 percent to 652 million yen.

Tokyo Electron gained 2.5 percent to 7,000 yen after Intel, the world’s largest semiconductor maker, raised its second-quarter revenue projection last week. Advantest Corp., a maker of chip testers, today added 0.6 percent to 1,260 yen.

Futures on the Standard & Poor’s 500 Index declined 0.3 percent today. The underlying gauge fell 0.7 percent last week, ending a streak of three weekly advances.

The Topix traded at 1.2 times book value, compared with 2.7 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index on June 13.

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, Jim Powell

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