Japan Stocks Retreat as Shippers Lead Losses; Tepco Rises

Japanese stocks fell, sending the Topix index to its first weekly loss in September, as shippers retreated and an advisory panel’s recommendations on government pension-fund holdings failed to meet expectations.

Nippon Yusen K.K. slid 2.1 percent as shipping lines dropped the most among the Topix’s 33 subsectors on a stronger yen. Mitsuba Corp. sank the most on the 1,745-member equity gauge after the auto-parts maker agreed to pay fines in a U.S. price-fixing settlement. Tokyo Electric Power Co. surged 6.6 percent after the Niigata governor said yesterday he’ll let the utility apply to restart the world’s largest nuclear plant.

The Topix slipped 0.2 percent to 1,217.52 at the close in Tokyo, falling 0.1 percent on the week. The gauge gained 0.8 percent yesterday after sliding as much as 1.6 percent. A panel yesterday advised the Government Pension Investment Fund to review its domestic bond portfolio. The Nikkei 225 Stock Average lost 0.3 percent today to 14,760.07, paring its weekly advance to 0.1 percent.

“The market fell today after a big jump yesterday on expectations about the review” of the GPIF’s portfolio, said Shuichi Saito, general manager at Chibagin Asset Management Co. “But in the end nothing concrete came out at the press conference. Investors were hoping a lower allocation to bonds would weaken the yen, which would be a plus for stocks.”

The Topix has added 10 percent in September, heading for its first monthly rise since April, and is up 7.4 percent for the quarter. Stocks rose after Tokyo won its bid to host the 2020 Olympics and the Federal Reserve refrained from cutting stimulus. The gauge has surged 42 percent this year, making Japanese stocks the best performers among developed markets.

Jobless Claims

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The measure rose 0.4 percent yesterday, as a Labor Department report showed the number of Americans filing applications for unemployment benefits unexpectedly fell last week, indicating further progress in the labor market.

A panel advising Japan’s GPIF, which oversees the world’s largest pool of retirement savings, said in an interim report that the fund should review its holdings of domestic bonds that make up the bulk of its pension assets. Some members recommended adding new investment classes. The panel will make its final recommendations in November.

“Market conditions have changed a lot and investors are expecting the government pension fund to increase the allocation of stocks,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. “But whether new money will flow into Japanese stocks depends on how much they will raise the weighting.”

Shippers, Yen

A gauge tracking shipping lines sank 1.8 percent, retreating from its highest level since April 2011 as the yen rose against 15 of its 16 major counterparts. The Baltic Dry Index, a measure of cargo costs, fell yesterday for the first time in 10 days. Nippon Yusen, Japan’s largest shipper, slid 2.1 percent to 324 yen. Mitsui O.S.K. Lines Ltd., the second-biggest, dropped 1.5 percent to 462 yen. Kawasaki Kisen Kaisha Ltd. lost 0.8 percent to 236 yen.

Mitsuba, which gets 25 percent of its revenue from the Americas, plunged 12 percent to 1,755 yen. The auto-parts maker was one of nine Japanese companies that pleaded guilty and agreed to pay a total of $740 million in fines in a price-fixing conspiracy targeting carmakers including General Motors Co. and Ford Motor Co. The Gunma-based firm will pay $135 million for rigging prices of windshield washers, starter motors and other components. Jtekt Corp., a bearings manufacturer handed down a $103.3 million penalty, slid 1.7 percent to 1,373 yen.

Tepco Soars

Tokyo Electric, also known as Tepco, surged 6.6 percent to 597 yen after extending gains in the last half hour of trading yesterday to close 7.1 percent higher. The utility submitted documents to Japan’s nuclear regulator today seeking safety checks on two reactors at its Kashiwazaki-Kariwa plant, it said in a statement. The application is a step toward restarting the station. Niigata Governor Hirohiko Izumida said yesterday he’d permit the application as long as Tepco controlled levels of radiation exposure to protect residents.

The Topix Electric Power & Gas Index climbed 1.3 percent. Tohoku Electric Power Co. gained 3.8 percent to 1,196 yen. Kansai Electric Power Co. added 2.3 percent to 1,256 yen.

Consumer prices excluding perishables rose 0.8 percent from a year earlier in August, the statistics bureau said today in Tokyo. The median forecast of 30 economists surveyed by Bloomberg News was for a gain of 0.7 percent. Stripping out energy costs as well, prices fell 0.1 percent.

Corporate Tax

The government is not thinking of an immediate reduction in the effective corporate tax rate, Finance Minister Taro Aso said today, after Kyodo News reported yesterday that the nation plans to start a study on cutting the rate. Prime Minister Shinzo Abe will announce an economic stimulus package Oct. 1 at the same time as giving his decision on whether to raise the country’s sales levy, ruling Liberal Democratic Party tax panel chief Takeshi Noda told reporters yesterday.

The Topix traded at 1.27 times book value today, compared with multiples of 2.50 for the S&P 500 and 1.76 for the Stoxx Europe 600 Index yesterday. The Japanese measure’s 30-day historic volatility was at 18.03 yesterday, compared with its five-year median of 19.39.

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