Japan’s Topix Falls Most in Five Weeks on China Concern

Japanese shares fell, with the Topix index capping its biggest decline in five weeks, after the yen gained yesterday as investors weighed China’s economic outlook. Shippers retreated.

Toyota Motor Corp., the world’s biggest carmaker, slid 2 percent. Nippon Yusen K.K. led shipping lines to the biggest decline among the Topix’s 33 industry groups. Sumitomo Metal Mining Co., which counts copper as a primary product, sank 4 percent after the metal traded near a 44-month low on concern that demand in China will slow.

The Topix fell 2.1 percent to 1,206.94 at the close in Tokyo, its largest drop since Feb. 4, with all industry groups on the gauge declining. The Nikkei 225 Stock Average lost 2.6 percent to 14,830.39, with just two companies rising. The yen traded at 102.92 to the dollar after rising 0.2 percent yesterday, the most in more than a week.

“The concern about China is big,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Holdings Inc., which has the equivalent of $651 billion in assets. “The outlook is unclear at the moment. While continuing to watch how it develops, investors are also preparing for the economy to deteriorate.”

Futures on the Standard & Poor’s 500 Index slid 0.1 percent. The equity measure dropped 0.5 percent yesterday after climbing to a record last week, as commodity shares slumped with copper and oil prices amid concern over China’s economy.

China Concern

Aggregate financing in China dropped to 938.7 billion yuan ($153 billion) last month amid a crackdown on shadow lending, a government report this week showed. That compares with January’s record 2.58 trillion yuan and is less than the 1.31 trillion yuan median estimate of analysts surveyed by Bloomberg News. Chinese exports slid the most since 2009 last month, a separate report over the weekend showed.

The yen rose 0.2 percent to 103.02 against the greenback yesterday amid demand for haven currencies.

“Investors unhappy that the yen has stopped weakening will take the lead in selling shares,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-biggest lender by market value. “The situation in China still needs careful attention as it has such a big impact on the global economy.”

Toyota fell 2 percent to 5,728 yen. Panasonic Corp., an electronics company that gets 48 percent of its revenue abroad, declined 2.2 percent to 1,259 yen.

Shipping Lines

A Topix gauge tracking shipping lines lost 3.5 percent, with Nippon Yusen dropping 4 percent to 312 yen. Mitsui O.S.K. Lines Ltd. fell 3.1 percent to 411 yen, while Kawasaki Kisen Kaisha Ltd. slid 3.4 percent to 224 yen.

Sumitomo Metal Mining slumped 4 percent to 1,282 yen as copper traded near the lowest level in 44 months amid surging volume. Data tomorrow will probably show China’s industrial production rose 9.5 percent in the January-February period from a year earlier, based on the median estimate of analysts surveyed by Bloomberg News. Output expanded 9.7 percent in December from a year earlier.

The Bank of Japan yesterday kept a pledge to expand the monetary base at a pace of 60 trillion to 70 trillion yen ($680 billion) per year, the central bank said in a statement in Tokyo, in line with all but one forecast in a Bloomberg News poll of 34 economists.

Central bank Governor Haruhiko Kuroda said yesterday that he doesn’t see a need to adjust policy right now and he doesn’t expect a repeat of the 1997 contraction to the economy after the sales tax is increased next month.

Stimulus Outlook

Kuroda provided “no support for the view prevailing in certain sections of the market that the BOJ will engage in additional monetary easing in April,” Nomura Holdings Inc. economists Shuichi Obata and Tomo Kinoshita wrote in a report dated yesterday. “We still think that the BOJ will engage in additional monetary easing in July.”

The 25-day Toraku Index, which compares the numbers of advancing and declining stocks on the Topix, reached 122.25 yesterday. A level above 120 signals that shares may be poised to fall, according to SMBC Nikko Securities.

The Topix fell 7.3 percent this year, after surging 51 percent last year. The gauge traded at 1.18 times book value, compared with 2.61 for the S&P 500 and 1.85 for the Stoxx Europe 600 Index yesterday. Volume on the Topix was 18 percent lower than the 30-day average today.

(Corrects time period of China data in 11th paragraph.)
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