Japan's Biggest Brokerages Tumble After Posting Lower Earnings

  • Nomura falls the most in two months as profit drops 12%
  • Global market turmoil also dented trading income at Daiwa

Nomura Holdings Inc. and Daiwa Securities Group Inc., Japan’s biggest brokerages, fell the most in at least in a month in Tokyo after reporting declines in second-quarter profit because of a trading slump stemming from the recent global market turmoil.

Shares of Nomura slid as much as 5.3 percent, the most in two months, and traded 4.5 percent lower at the midday break Thursday. Daiwa tumbled as much as 5.2 percent, the biggest intraday decrease since Sept. 29, and was 4.2 percent lower at the interval. The benchmark Topix index lost 0.2 percent.

Global firms from Goldman Sachs Group Inc. to Credit Suisse Group AG posted lower earnings last quarter after China’s equity rout roiled markets worldwide. Nomura’s Chief Financial Officer Shigesuke Kashiwagi told analysts in a call on Wednesday that he can’t be positive because client transactions remain muted even though it appears that markets have recovered.

“The weak revenue conditions seem to have continued in October, and profits from core businesses may not recover substantially if the trend continues,” said Masao Muraki, a senior analyst at Deutsche Securities Inc. in Tokyo. “The Nomura CFO’s remarks may have been intended to manage the market’s expectations that business has improved.”

Net income at Nomura dropped 12 percent from a year earlier to 46.6 billion yen ($386 million) in the three months ended Sept. 30, the Tokyo-based company said Wednesday. Trading income fell 51 percent. Daiwa’s profit declined 35 percent to 24.3 billion yen as trading income slumped 39 percent.

Nomura’s earnings also took a hit from the resolution of a lawsuit with an Italian bank. The settlement with Banca Monte dei Paschi di Siena SpA cut second-quarter profit by 35 billion yen, casting doubt over whether the Japanese firm can achieve a goal of earning 50 billion yen abroad this fiscal year.

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