Japanese Stocks Fall Before Fed Meeting; KDDI Plunges

Japanese stocks fell, with the Topix index retreating for the third time in four days, ahead of a Federal Reserve meeting starting today at which it may decide to reduce the pace of stimulus.

Mobile-phone operators KDDI Corp. and SoftBank Corp. sank at least 3.8 percent after larger rival NTT DoCoMo Inc. announced pricing measures for the new iPhones. Daiichi Sankyo Co. fell 6.8 percent after U.S. regulators restricted drug imports from a facility of its Indian unit Ranbaxy Laboratories Ltd. Sharp Corp. advanced 6.6 percent on a report the loss-making TV manufacturer will book a profit in the first half.

The Topix dropped 0.3 percent to 1,181.64 at the close in Tokyo after rising as much as 0.6 percent. Volume was 62 percent above the 30-day average. The gauge gained 3.3 percent last week on optimism Tokyo’s winning bid to host the 2020 Olympic Games would boost corporate profits. The Nikkei 225 Stock Average lost 0.7 percent to 14,311.67. Markets were closed yesterday.

“Japanese stocks fell after rallying a bit too much last week on good news such as the Olympics,” said Tetsuo Seshimo, a Tokyo-based portfolio manager at Saison Asset Management Co., which oversees about 76 billion yen ($767 million). “Plus, investors want to wait for the Fed’s meeting and I see a 50-50 chance for stimulus reduction.”

Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. The Fed is expected to reduce its $85 billion in monthly bond purchases by $10 billion at the end of the two-day meeting. The equity measure closed at its highest level since Aug. 5 yesterday after Lawrence Summers withdrew from the race to lead the central bank, possibly paving the way for Janet Yellen to become the next head. Some investors say Yellen may favor a slower reduction of stimulus.

Tapering Expected

“The market consensus is the Fed will decide to trim its quantitative easing, but investors don’t want to shift their positions one way or the other before the key event,” said Takahiro Nakano, a Tokyo-based strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by value.

The Topix is up 37 percent this year, making Japanese equities the best performers among developed markets. The measure traded at 1.23 times book value today, compared with 2.5 for the S&P 500 and 1.76 for the Stoxx Europe 600 Index yesterday.

KDDI fell the most on the Nikkei 225 today, plunging 7.2 percent to 4,800 yen, while SoftBank dropped 3.8 percent to 6,360 yen. NTT DoCoMo’s prices and incentives for the iPhone 5S and 5C are “quite surprising” and may lure KDDI and SoftBank customers, Mitsubishi UFJ Morgan Stanley Securities Co. analyst Hideaki Tanaka wrote in a note. They may also be negative for the company’s own earnings, he said. NTT DoCoMo lost 2.7 percent to 156,900 yen.

Daiichi Sankyo

Daiichi Sankyo slid 6.8 percent to 1,772 yen after Ranbaxy plummeted 30 percent yesterday. The U.S. Food and Drug Administration issued an import alert dated Sept. 13 on a Ranbaxy facility in Mohali, Punjab state. Daiichi Sankyo owns 64 percent of the Indian drugmaker.

Kansai Electric Power Co. dropped 2.2 percent to 1,229 yen today, as Japan’s last operating nuclear reactor went offline for maintenance, stoking concern about power shortages this winter. Chubu Electric Power Co. fell 3 percent to 1,275 yen.

Among stocks that rose, Sharp jumped 6.6 percent to 370 yen. The Nikkei newspaper reported it’s likely to swing to an operating profit of about 30 billion yen in the six months through September from a year earlier on increased sales of solar batteries and lower costs.

Nippon Yakin Kogyo Co. soared 9.6 percent to 307 yen after starting contract production for a unit of Nippon Steel & Sumitomo Metal Corp., Japan’s biggest steelmaker.

Before it's here, it's on the Bloomberg Terminal.