Most Japanese Stocks Fall on BOJ Remarks, Greece Concern

Most Japanese stocks declined, with the Topix Index’s trading value falling to a four-month low, after the Bank of Japan said it will not automatically expand its asset purchases and amid concern Greece will exit the euro.

MS&AD Insurance Group Holdings Inc. paced declines in the sector on a report Lloyd’s of London Ltd. is prepared for the single currency to collapse if Greece leaves. Renesas Electronics Corp., the world’s biggest maker of automotive microcontrollers, sank 11 percent on plans to raise capital. Furukawa Co. gained 3.1 percent on a report the civil-engineering machinery maker and the University of Tokyo will develop equipment to test the radiation level of fish.

The Topix slid 0.1 percent to 721.11 at the 3 p.m. close in Tokyo, set for a monthly drop of 8.7 percent. The Nikkei 225 Stock Average added 0.2 percent to 8,593.15, with volume 24 percent below the 30-day average. The total value of stocks traded on the Tokyo Stock Exchange’s first section fell to 781.5 billion yen ($9.8 billion) today, the lowest since Jan. 16.

“Investors in the market cannot decide their positions because the Greek issue remains unpredictable in Europe,” said Yoshihisa Okamoto, who helps oversee about $33 billion at Mizuho Asset Management Co. “The market doesn’t think the BOJ will automatically expand its asset purchases, but many people want to sell shares and are using the remarks as a catalyst.”

Lloyd’s of London is prepared for a collapse of the European single currency that may be triggered if Greece leaves the monetary union, The Sunday Telegraph reported after an interview with Chief Executive Officer Richard Ward. Bankia SA, Banco Popular Espanol SA and Bankinter SA had their ratings cut to junk by Standard & Poor’s, which cited Spain’s weakening economy.

Insurers declined. MS&AD Insurance Group lost 1.5 percent to 1,244 yen, while NKSJ Holdings Inc. slid 0.9 percent to 1,484 yen.

BOJ Minutes

Japanese stocks also dropped after the minutes of an April 27 meeting concerning the Bank of Japan’s asset purchases were released today in Tokyo. “Members made note of some misunderstanding that the bank would continue to increase the size of its program in an automatic manner,” until the bank’s 1 percent inflation goal is met.

“The market doesn’t think the BOJ will automatically expand its asset purchases, but many people want to sell shares and are using the remarks as a catalyst,” said Mizuho Asset’s Okamoto.

The Topix has plunged 17 percent from this year’s high on March 27 as China’s economic growth slowed, and on renewed concern about Europe’s debt crisis. The political gridlock in Greece after an inconclusive election this month reignited concern the nation will renege on austerity pledges required for 240 billion euros ($302 billion) in aid and exit the monetary union.

Topix Valuations Fall

The drop cut the value of stocks listed on the index to 0.84 times book value, compared with 2.08 times for the S&P 500 and 1.33 times for the Stoxx 600. A number below one means companies can be bought for less than value of their assets.

Renesas Electronics plunged 11 percent to 244 yen after the company said it will eliminate 10,000 jobs and raise 100 billion yen ($1.3 billion) in capital under its restructuring plan. NEC Corp., Renesas’s top shareholder, dropped 9.2 percent to 108 yen.

Among companies that gained, Furukawa climbed 3.1 percent to 66 yen after the Nikkei newspaper reported the company and University of Tokyo will develop screening equipment to check radiation levels in a fishing vessel’s entire catch in seven to eight seconds.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE