Japan’s property stocks, including Mitsubishi Estate Co., had the biggest drop in three weeks amid concerns that Tokyo will not be selected to host the 2020 Olympics Games this weekend.
The 45-member Topix Real Estate Index declined as much as 2.3 percent, the biggest loss since Aug. 15. The index was the worst performer among 33 groups that make up the benchmark Topix index. Mitsubishi Estate, Japan’s second-biggest developer, declined 2.5 percent, while Sumitomo Realty & Development Co. lost 1.4 percent.
Tokyo is the odds-on favorite to host the 2020 Olympic Games, according to OddsChecker.com, a website that gathers online gambling data. The city, which last hosted the Olympics in 1964, has 44 percent of the bets placed, Madrid is second with a 29 percent chance of winning the Summer Games, followed by Istanbul with 24 percent, it showed.
“There’s the risk that Tokyo may not win the bid to host the Olympics, so investors are going to lean toward profit-taking in the construction and real estate sectors,” said Masahiro Ayukai, a senior strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “If Japan loses its bid for the Olympics, then stocks for which a sure win had been priced-in are likely to reverse gains.”
The index tracking real estate stocks has gained 48 percent this year, making it the fifth-best performer among the 33 industry groups, in part on optimism that should Tokyo be selected to host the Olympic Games developers would benefit from increased demand.
The Topix Construction Index declined 1 percent, trimming its year-to-date advance to 23 percent.