Japanese stocks fell as concern about steps by China to curb margin trading outweighed additional monetary easing in the world’s second-largest economy.
Developers led declines, with Nomura Real Estate Holdings Inc. slumping 5.4 percent after a broker downgraded its shares. Metal product makers posted the second-biggest losses on the Topix index after Toyo Seikan Group Holdings Ltd. reported preliminary earnings that missed its forecast. Itochu Corp. dropped 1.5 percent as it said it will book a charge after an employee made improper transactions at the trading firm. Panasonic Corp. rose 2 percent as the Nikkei newspaper reported profit this fiscal year will climb 70 percent.
The Topix lost 0.4 percent to 1,582.68 at the close in Tokyo, swinging from a gain of 0.2 percent, as all but five of its 33 industry groups declined. The Nikkei 225 Stock Average slipped 0.1 percent to 19,634.49. Chinese shares dropped after authorities tightened rules around buying stocks with borrowed money and bolstered short-selling. The declines came despite government action to ease monetary policy.
“The initial reaction to Friday’s short-selling announcement was to sell, and we saw that reflected in overseas markets,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. in Tokyo. “However, there’s no fundamental change to the fact that the Chinese market is being supported by monetary easing.”
Japan’s largest trading partner on Sunday lowered the amount Chinese banks must set aside as reserves by the biggest amount since the global financial crisis, following data last week that showed the economy grew at the slowest pace in six years. The move came after regulators on Friday moved to stem a surge in Chinese equities, banning a source of financing for margin trades and making it easier for short sellers to bet on declines.
“With the cut to its deposit reserve ratio, you can sense that Chinese authorities do not want its stock market to collapse amid slowing economic growth,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo.
E-mini futures on the S&P 500 gained 0.4 percent after the underlying gauge slumped 1.1 percent on Friday in New York, sending U.S. shares to the first weekly decline this month.
Nomura Real Estate slumped 5.4 percent after Mitsubishi UFJ Morgan Stanley Securities Co. downgraded the stock to equalweight from overweight. The broker said rising construction costs and slowing sales of condominiums will make it harder for the property developer to beat expectations.
Metal product maker Toyo Seikan Group dropped 1.6 percent after reporting preliminary net income in the fiscal year through March of 3.5 billion yen, below its forecast for 10 billion yen.
Itochu lost 1.5 percent after saying an employee in a subsidiary made transactions to hide losses. The company will book a charge of up to 4.3 billion yen in the fiscal year that ended in March, but did not change its net income forecast.
Panasonic climbed 2 percent after the Nikkei reported over the weekend that profit in the current fiscal year should climb 70 percent to 200 billion yen. The newspaper said earnings will be helped by structural reforms and improving sales of auto and housing-related products.