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Japan’s Topix Index Declines on Lenders, Property Shares

May 19 (Bloomberg) -- Japanese shares fell, with the Topix index adding to back-to-back weekly declines, as the yen strengthened and consumer-finance and property companies slid.

Tokyu Fudosan Holdings Corp. sank the most on the Nikkei 225 Stock Average as real-estate shares dropped. Credit Saison Co., a non-bank lender, slumped 4.9 percent. Toyota Motor Corp., the world’s No. 1 carmaker, was the biggest drag on the Topix. Tokyo Electron Ltd. surged 5.3 percent after Applied Materials Inc., which will acquire the Japanese industrial-electronics maker in a stock swap, forecast sales that topped the low end of analysts’ estimates.

The Topix slipped 0.8 percent to 1,150.07 at the close in Tokyo, the lowest in more than a month. The measure fell 0.6 percent last week, extending a 1.4 percent drop the previous period. The Nikkei 225 dropped 0.6 percent to 14,006.44 today. The yen traded at 101.28 per dollar, gaining for a fourth day.

“They have to redo all three arrows” for stocks to rally, Alex Friedman, the global chief investment officer at UBS Wealth Management told Bloomberg TV. “There needs to be new Bank of Japan easing, new fiscal stimulus and they need to cut the corporate-tax rate.”

The central bank’s monetary stimulus and government spending, the so-called first two arrows of Prime Minister Shinzo Abe’s economic strategy, drove a world-beating 51 percent jump in the Topix last year. The measure fell 11 percent in 2014 through May 16 amid concern the measures, which also include deregulation as the third policy initiative, won’t be enough to revive the economy and generate inflation.

Machinery Orders

Of the Topix companies that posted results from April 1 through May 16 and for which Bloomberg had estimates, 55 percent beat analyst predictions for profit, according to data compiled by Bloomberg.

Japan’s core machinery orders, an indicator of future capital spending, surged 19.1 percent in March from February, Cabinet Office data showed today. Analysts surveyed by Bloomberg had expected a 5.8 percent increase.

The Topix traded at 1.13 times book value at the end of last week, compared with 2.62 for the Standard & Poor’s 500 Index and 1.89 for the Stoxx Europe 600 Index.

Futures on the S&P 500 slipped 0.1 percent today. The U.S. equities benchmark gauge ended last week little changed after reaching a record high May 13.

Tokyo Fudosan declined 5.3 percent to 783 yen and Tokyo Tatemono Co. retreated 4 percent to 878 yen. Nomura Real Estate Holdings Inc. fell 2.2 percent to 1,862 yen. Credit Saison declined a fourth day, losing 4.9 percent to 1,820 yen.

Tokyo Electron rose 5.3 percent to 6,187 yen after the Applied Materials profit forecast. The largest supplier of semiconductor-manufacturing equipment is benefiting from demand for machines used to make flat-panel displays.

Yamaichi Electronics Co. slumped 14 percent to 385 yen after the electronics-circuit maker forecast a 23 percent drop in profit.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey

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