Japan’s Topix Retreats as Brokerages, Telephone Stocks Decline

  • Yen weakens following biggest gain since Brexit on Friday
  • Bank shares advance for a second day following BOJ decision

BOJ Policy Plan: Is It a Good Move?

Shares in Tokyo slid, with brokerages leading declines, as investors weighed the Bank of Japan’s decision to expand monetary policy.

The Topix index declined less than 0.1 percent to 1,321.83 at the close in Tokyo, paring losses of as much as 1.1 percent and after gaining 0.2 percent. About three shares fell for every one that rose. The Nikkei 225 Stock Average advanced 0.4 percent. The yen slid 0.4 percent to 102.43 a dollar after strengthening 3.1 percent on Friday, the most since June 24.

The BOJ said it will almost double its annual exchange-traded fund purchases to 6 trillion yen ($59 billion) on Friday, while leaving its bond-buying program and negative deposit rate unchanged, whipsawing Japanese equity markets as financial shares surged while real-estate companies slumped. Banks climbed again on Monday for the biggest boost to the Topix.

“The market wasn’t satisfied by the BOJ’s stimulus expansion,” said Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management Co. in Tokyo. “But the focus is shifting to fiscal policy rather than monetary policy. The government’s showing that they mean business.”

The government is due to announce details of a more than 28 trillion yen spending package on Tuesday. The plan will include 13 trillion yen in “fiscal measures,” Prime Minister Shinzo Abe said in excerpts of a speech broadcast by NHK public television last week.

The Topix had fallen 16 percent this year through Thursday, before the BOJ policy announcement, with much of that decline coming after the central bank introduced negative interest rates in January. A gauge of bank shares plunged 34 percent through Thursday, while the yen strengthened 14 percent against the dollar. Financial shares led gains on Friday, with Mitsubishi UFJ Financial Group Inc. surging 7.7 percent.

Bank Shares

“The banks were reflexively bought on Friday on the view that the bad impact on earnings from more negative rates has gone,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Center.

Brokerages and airlines led losses among industry groups. The Topix Banks Index added 3.3 percent, leading the advance, while telecommunication shares also rose.

  • NEC Corp. sank 11 percent after the computer company posted about 30 billion yen in operating losses for the quarter ended June on lack of growth in developing markets and the domestic economy.
  • Sony Corp. rose 1.7 percent after the electronics manufacturer surprised analysts by posting a profit of 21.2 billion yen last quarter. Analysts had expected a 39-billion yen loss.
  • Panasonic Corp. declined 7 percent after reporting profit for the three months ended June that missed analyst estimates.

Futures on the S&P 500 Index climbed 0.4 percent on Monday. The underlying measure capped a fifth monthly gain after data that showed the American economy grew slower than forecast last quarter gave the Federal Reserve no reason to accelerate its timetable for higher interest rates.

U.S. gross domestic product expanded 1.2 percent last quarter at an annualized rate, figures from the Commerce Department showed Friday, less than half the advance projected by economists in a Bloomberg survey.

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