Japan’s Topix Retreats on Earnings, Yen; Shippers Tumble

Japanese shares fell, with the Topix index almost erasing this month’s advance, as companies including Nippon Yusen K.K. and GS Yuasa Corp. slid on earnings and the yen gained.

Canon Inc., a camera maker that gets about 80 percent of its revenue abroad, slipped 1 percent. Nippon Yusen, Japan’s biggest shipping line, slumped the most on the Nikkei 225 Stock Average as it lowered its operating-profit outlook by 10 percent. A Topix gauge tracking shippers plunged 6.5 percent. Battery maker GS Yuasa sank 6.1 percent after operating income declined. SKY Perfect JSAT Holdings Inc. advanced the most on the Nikkei 225 after posting a 31 percent gain in profit.

The Topix slipped 0.9 percent to 1,194.26 at the close in Tokyo on the busiest day of the reporting season, trimming its October gain to less than 0.1 percent. The Nikkei 225 dropped 1.2 percent to 14,327.94. Stocks also fell after the Bank of Japan said it would keep monetary policy unchanged. The yen rose 0.2 percent to 98.32 per dollar today.

“Earnings have broadly been in line with our expectations, but a lot of the bad ones are being sold off in bigger extremes, so they’re standing out,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees the equivalent of $37.6 billion in assets. “The yen has been the reason the Japanese market has been lagging its global peers this month.”

Worst Performer

The Topix is poised to be the worst performer this month among 24 developed markets tracked by Bloomberg. Japanese shares are still the biggest gainers among the markets in 2013 amid optimism Prime Minister Shinzo Abe’s policies and unprecedented monetary easing from the Bank of Japan will lead the country out of deflation. The Standard & Poor’s 500 Index has gained 4.9 percent so far this month, while the Stoxx Europe 600 Index has increased 3.3 percent.

Exporters fell as the yen gained and earnings disappointed investors. Canon lost 1 percent to 3,090 yen. Honda Motor Co., which gets 80 percent of its sales overseas, declined 1.3 percent to 3,915 yen after second-quarter net income and operating profit missed estimates. Sony Corp., Japan’s biggest electronics exporter, lost 1.7 percent to 1,877 yen. The company cut its full-year profit forecast after the market closed.

Earnings season peaked today with almost 270 of the 1,744 Topix member companies announcing results, according to data compiled by Bloomberg. Of the 346 that have reported this quarter and for which Bloomberg had estimates, 62 percent posted sales that beat expectations.

Profit Estimates

Earnings per share for companies on the gauge are expected to increase 50 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

The Topix Marine Transportation Index’s 6.5 percent drop was the biggest among the 33 Topix industry groups.

Nippon Yusen tumbled 8.3 percent to 299 yen, the most since January 2009. The shipper cut its full-year operating profit forecast by 10 percent to 42 billion yen, compared with the 54 billion yen average estimate of 16 analysts surveyed by Bloomberg.

Mitsui O.S.K. Lines Ltd., Japan’s No. 2 in the sector, dropped 6.6 percent to 414 yen after it also trimmed its full-year operating profit outlook to below estimates.

Toshiba Corp., the Japanese maker of products ranging from televisions to nuclear reactors, sank 5.2 percent to 416 yen, even after raising its operating-income outlook by 12 percent. The forecast of 290 billion yen missed the 308 billion yen average estimate of 25 analysts compiled by Bloomberg.

SKY Perfect

SKY Perfect JSAT Holdings Inc., a satellite TV broadcaster, surged 7.2 percent to 567 yen, its highest level since 2007. The company posted a 31 percent increase in net income to 6.53 billion yen and a 33 percent increase in operating profit.

NGK Insulators Ltd. jumped 6.9 percent to 1,644 yen after first-half net income surged about 11-fold to 12.6 billion yen. The company raised its profit forecast by 14 percent.

The Bank of Japan stuck with its unprecedented monetary easing today as Prime Minister Shinzo Abe seeks to jolt the nation out of 15 years of deflation. Governor Haruhiko Kuroda’s board kept a pledge to expand the monetary base by between 60 trillion and 70 trillion yen ($711 billion) a year, matching the forecasts of all 34 economists in a Bloomberg survey.

“There may have been some disappointment that the BOJ didn’t do anything new” even though the consensus was that there would be no change, said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong.

U.S. Futures

Futures on the S&P 500 fell 0.4 percent today. The equity measure decreased 0.5 percent yesterday following the conclusion of a two-day Federal Reserve meeting, halting a four-day winning streak.

The U.S. central bank decided to press on with $85 billion in monthly bond purchases at its meeting yesterday, saying it needs to see more evidence that the economy is improving amid signs of “underlying strength.” The Fed removed a sentence from its previous policy statement that had said tighter financial conditions could slow the improvement in the economy, sparking speculation it might cut stimulus in the coming months.

The odds of the U.S. starting to taper in January rose to 45 percent, from 25 percent before yesterday’s statement, Citigroup Inc. said. Economists surveyed by Bloomberg Oct. 17-18 had predicted the Fed would begin paring stimulus in March.

The Topix traded at 1.24 times book value today, compared with 2.56 for the S&P 500 and 1.80 for the Stoxx 600 yesterday. The Japanese gauge’s 30-day historic volatility was at 17.15 yesterday, compared with its five-year median of 19.19. Volume on the measure was 6.6 percent above the 30-day average today.

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