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Japan Stocks Fall on China Credit Concerns, Stronger Yen

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June 25 (Bloomberg) -- Japanese shares fell, with the Topix index retreating for a second day, amid concern a credit squeeze in China will hamper growth. Exporters dropped as the yen gained against the dollar.

Daikin Industries Ltd., an air-conditioner maker that gets 18 percent of revenue in China, capped its biggest two-day loss since March 2011. Nissan Motor Co., Japan’s third-largest carmaker by market value, slipped 1.1 percent as the yen strengthened. A report that a giant panda housed at a Tokyo zoo may not be pregnant caused Totenko Co., operator of a nearby restaurant, to plunge amid speculation business may suffer.

The Topix fell 1 percent to 1,078.66 at the close of trading in Tokyo, after rising as much as 0.7 percent. Volume was about 35 percent below the 30-day average. More than three stocks dropped for each that rose on the 1,709-member measure. The Nikkei 225 Stock Average lost 0.7 percent to 12,969.34.

“Clouds have gathered over China and you can’t see how its economy will improve,” said Seiji Iwama, a fund manager at Daiwa SB Investments Ltd., which oversees the equivalent of about $51 billion. “Japanese stocks will continue to struggle until emerging share markets calm down.”

The Topix has fallen about 15 percent from an almost five-year high on May 22, paring this year’s gain to 25 percent. The gauge traded at 13.6 times average estimated earnings, compared with 14.3 for the Standard & Poor’s 500 Index and 12.2 for the Stoxx Europe 600 Index.

Topix Volatility

Japan’s broader gauge has swung an average of about 3.2 percent daily since May 22. The Topix’s 30-day historic volatility was at 40.31 today, near its highest level since the 2011 earthquake and tsunami. The measure may rise to 1,300 by the end of the year, according to the median estimate of 17 strategists surveyed by Bloomberg.

The CSI 300 Index of China’s biggest companies posted its biggest drop since August 2009 yesterday after the central bank signaled it will maintain efforts to curb speculative lending. The Shanghai Composite Index fell as much as 5.8 percent today, before paring losses in the afternoon.

Chinese equities slumped after the nation’s overnight repurchase rate jumped to a record on June 20. Goldman Sachs Group Inc. cut its 2013 gross domestic product forecast for the nation yesterday, saying the cash squeeze is hurting growth.

Companies that do business in China fell today. Daikin, which counts Asia’s largest economy as its No. 1 overseas market, declined 3.8 percent to 3,830 yen, capping the biggest two-day loss since March 16, 2016. Fanuc Corp., which supplies robotics to Chinese factories, slid 1.7 percent to 14,030 yen.

Exporters Retreat

Exporters fell as the yen rose against 14 of its 16 major counterparts. Nissan dropped 1.1 percent to 984 yen. Mazda Motor Corp., a carmaker that gets 73 percent of its revenue abroad, slid 1.9 percent to 368 yen.

Totenko plunged 13 percent to 205 yen after Kyodo News reported a giant panda in Ueno Zoological Gardens may have shown false signs of pregnancy. Pandas draw a large number of visitors. Seiyoken KK, the operator of a French restaurant near the zoo, slumped 16 percent to 774 yen.

Among stocks that rose, Tama Home Co., a housebuilder, surged 13 percent to 1,139 yen after the Nikkei newspaper reported its operating profit for the year ending May 2014 will rise 20 percent to 6 billion yen ($62 million).

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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