Sompo Japan Asset Management Co., a unit of insurer NKSJ Holdings Inc., cut its target for the Topix Index to 800 from 860 for the year ending March.
Europe’s debt crisis is leading to a reduced outlook for global growth and will weigh on the index of the largest companies listed in Tokyo, Goya Nakao, senior investment manager at Sompo Japan, which oversees about 4.5 trillion yen in Tokyo, said by telephone yesterday. The Topix gained 1.6 percent to close at 749.63 yesterday, paring its loss for the year to 17 percent.
“It’s difficult to solve the European issue quickly, so market uncertainty will remain,” said Nakao. “The anticipated growth rate is falling globally and you can see a downside tendency in U.S. long-term interest rates” amid demand for safer assets like government bonds, Nakao said.
U.S. Treasuries have returned 8.9 percent this year, according to bond indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Benchmark 10-year yields touched a record low of 1.67 percent on Sept. 23.
The new target of 800 for the Topix assumes a valuation of 12.3 times estimated earnings. That compares with 13.2 times for Sompo Japan’s previous target of 860, set in mid-August.
Sompo Japan left its estimate for average earnings per share on the Topix’s unchanged at about 65 yen for the fiscal year ending March 2013.