Japanese Stocks Retreat as Topix Pares Second Monthly Advance

  • Insurers, shipping companies and drugmakers lead declines
  • Investors weigh Abe's extra budget moves to boost economy

Japanese stocks fell, paring the Topix index’s second straight monthly gain, as insurers, shippers and drugmakers led declines.

The Topix index fell 0.9 percent to 1,580.25 at the close in Tokyo, with all but three of its 33 industry groups declining. The gauge rose 1.4 percent on the month, following its biggest increase in 2 1/2 years in October. The Nikkei 225 Stock Average slipped 0.7 percent to 19,747.47 on Monday.

“Japanese stocks are overheating as they’ve kept rising since October,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. “The dollar is strong basically because a U.S. rate hike is expected. It is positive for Japanese corporate earnings.”

Japanese equities have weathered a cooling Chinese economy and the prospect of monetary tightening by the Federal Reserve to rank among the best performers in developed countries this year. The Nikkei 225 has rallied 13 percent in 2015.

Traders are betting there is a 74 percent chance the Fed will raise U.S. interest rates in December. The yen traded at 122.75 per dollar after weakening 0.2 percent on Friday.

Shipper Mitsui OSK Lines Ltd. slumped 3 percent to lead declines on the Topix Marine Transportation Index, which lost 1.9 percent.

Daito Trust Construction Co. gained 0.6 percent after Daiwa Securities Group Inc. raised its investment rating on the real-estate company to outperform from neutral.

Electronic-component maker Ryosan Co. added 6.4 percent, the most since Feb. 27, after saying it will buy back as much as 4.2 percent of its shares.

Energy Stocks

Inpex Corp. lost 1.6 percent and Japan Petroleum Exploration Co. fell 1.9 percent to lead declines among energy explorers. Crude oil prices fell 3.1 percent on Friday and are headed for the largest monthly drop since July.

Investors are also weighing measures by Prime Minister Shinzo Abe to boost economic growth and drive Japan out of recession. Abe on Friday ordered the compilation of an extra budget for the current fiscal year in a bid to spur growth after the economy contracted in the past two quarters.

Data on Monday showed Japan’s industrial production rose 1.4 percent in October from a month earlier, missing economists forecasts for a 1.8 percent gain. Retail sales jumped 1.8 percent from a year earlier, beating economist estimates for a 0.9 percent increase.

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