Japanese Stock Futures Fall Amid Speculation Market Overbought

Japanese stock futures fell, indicating the Nikkei 225 Stock Average will retreat from its highest level in 32 months, on speculation the market is overbought.

American Depositary Receipts of Sharp Corp., Japan’s biggest maker of liquid crystal displays that counts Apple Inc. as a customer, lost 4.6 percent, indicating its shares may decline for a second day after the Nikkei newswire reported Apple scaled back orders for iPhone parts. Brother Industries Ltd. may be active after Credit Suisse Group AG advised selling shares of the Japanese office equipment manufacturer. ADRs of Toyota Motor Corp. climbed 0.5 percent as Citigroup Inc. recommended buying the carmaker’s shares.

Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 10,865 in Chicago yesterday, down from 10,890 at the close in Osaka, Japan. They were bid in the pre-market at 10,860 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index rose 0.1 percent and New Zealand’s NZX 50 Index gained 0.1 percent.

“The number of domestic investors seeing Japanese shares as overvalued increased again,” said Naoki Kamiyama, Tokyo-based chief equity strategist at Bank of America Corp.

The Nikkei 225 Stock Average’s 14-day relative strength index was at 80 yesterday, above the 70 threshold that some traders say signals a decline. The gauge closed at 10,879.08 yesterday, its highest level since April 2010, and has climbed 26 percent since Nov. 14, when elections were called. The yen has fallen to a more than two-year low amid expectations the central bank will increase cash infusions to jump-start growth and defeat deflation.

Relative Value

The MSCI Asia Pacific Index traded at 14.3 times estimated earnings, compared with 13.3 times for the Standard & Poor’s 500 Index and a multiple of 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg News.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The gauge yesterday rose 0.1 percent as a rally in retail and transportation companies overshadowed concern about discussions on raising the U.S. government’s debt ceiling.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 0.6 percent to 101.49 yesterday in New York.

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