Topix Posts Biggest Weekly Loss Since June on China, Yen

Japanese shares fell, with the Topix index posting its biggest weekly loss since June, as the yen rose a fifth day on haven demand amid mounting concern about China’s economy and turmoil in Ukraine.

All 33 industry groups on the Topix fell, with power providers leading the slump. Toyota Motor Corp., the world’s biggest carmaker, lost 3 percent. Dai-ichi Life Insurance Co. fell 4.3 percent after saying it lost data containing customers’ medical records. EBook Initiative Japan Co. tumbled 15 percent after the digital book provider forecast lower profit.

The Topix dropped 3.2 percent to 1,164.70 at the close in Tokyo, completing a 5.8 percent slide this week. The Nikkei 225 Stock Average lost 3.3 percent to 14,327.66, with no shares advancing on the measure. The yen strengthened for a fifth day, its longest rising streak since May.

“China is changing from a high-growth economy to a stable growth economy, and foreign investors are getting insecure,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. “With the yen appreciating and U.S. stocks having fallen a lot with investors adjusting holdings, sentiment is worsening.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent. The measure yesterday erased this year’s gains as weaker-than-forecast data from China and tension in Ukraine overshadowed reports showing an improving American economy.

China Outlook

Estimates for China’s economic growth were cut by JPMorgan Chase & Co., UBS AG, Nomura Holdings Inc. and Bank of America Corp. after data yesterday showed factory output rose less than expected in the first two months of the year, the weakest start to a year since 2009. The official target for gross domestic product expansion is 7.5 percent.

The Topix retreated 11 percent this year after surging 51 percent last year. The Nikkei 225 lost 12 percent, the biggest drop among 24 developed market equity benchmarks tracked by Bloomberg. The yen advanced as much as 0.3 percent to 101.50 per dollar today.

Toyota, which gets about 30 percent of its sales from North America, slid 3 percent to 5,551 yen. Honda Motor Co., which gets about 80 percent of its revenue abroad, lost 3.1 percent to 3,607 yen. Canon Inc., the world’s biggest camera maker, dropped 2.2 percent to 3,032 yen.

“Given the yen is persistently holding firmer and with the upcoming sales tax increase, technicals are leading investor sentiment,” said Gavin Parry, managing director of Hong Kong-based brokerage Parry International Trading. “The Nikkei 225 is range bound. The yen lifted sharply” due to increased haven demand, he said.

Technical Signals

The Nikkei 225 fell below its 200-day moving average today. A drop below this level raises the probability for further bearish technical signals, Parry said.

Utilities slumped, with the Topix sector tumbling 4.7 percent. Shikoku Electric Power Co. and Tokyo Electric Power Co. each dropped at least 4 percent. Komatsu Ltd. and Kubota Corp. lost at least 3.6 percent as machinery makers also slid.

Dai-ichi Life, Japan’s biggest insurance company by revenue, slumped 4.3 percent to 1,449 yen after saying it lost magnetic tapes containing the data of 39,585 customers’ medical records.

EBook Initiative tumbled 15 percent to 1,498 yen, the biggest drop on the Topix. The digital book company forecast net income of 151 million yen for the current fiscal year on a parent basis, 40 percent lower than the previous year’s results.

The Topix traded at 1.14 times book value today, compared with 2.58 for the S&P 500 yesterday and 1.81 for the Stoxx Europe 600 Index.

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