Japan Stocks Trim Gains After BOJ Keeps Asset-Purchase Program Unchanged

Author: Spencer Ogden
Date posted13/Mar/2012
Author: Spencer Ogden

Japanese shares pared gains after the Bank of Japan decided against expanding its asset-purchase program, and the yen rose against the dollar. Stocks climbed earlier as euro-area finance chiefs gathered to sign off on a Greek bailout.

Canon Inc. (7751), a camera maker that generates 31 percent of its revenue in Europe, slid 0.7 percent after gaining as much as 1.1 percent earlier. Tokyu Land Corp. (8815) paced gains among real estate companies after Credit Suisse Group AG raised the stock’s target price. Chemical maker Asahi Kasei Corp. (3407) fell 5.4 percent after agreeing to buy U.S.-based Zoll Medical Corp. for $2.2 billion.

The Nikkei 225 Stock Average (NKY) rose 0.1 percent to 9,899.08 at the 3 p.m. close of trading in Tokyo after earlier advancing as much as 1.2 percent. The broader Topix (TPX) Index was little changed at 845.33. The MSCI Asia Pacific Excluding Japan Index (MXAPJ)gained 1.4 percent.

“Details don’t matter, what matters is whether they boosted the asset-purchase fund” in terms of the BOJ decision, said Masaru Hamasaki, who helps oversee the equivalent of $23 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “Investors are shrugging off the announcement.”

Stocks pared gains after the Bank of Japan left its asset-purchase fund at 30 trillion yen ($365 billion) and a credit-loan program at 35 trillion yen. The central bank on Feb. 14 surprised the market by increasing the asset-purchase fund with more government bond purchases and setting an inflation goal of 1 percent, weakening the yen and boosting stocks.

BOJ Programs

Separately, the BOJ today introduced a 1 trillion yen program for loans denominated in U.S. dollars and is adding 500 billion yen to its 3 trillion yen venture-capital style investment fund. The Federal Reserve is also wrapping up its policy meeting later today.

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.4 percent today. The gauge was little changed in New York yesterday amid low-volume trading as investors weighed the Chinese slowdown. Euro-area finance ministers are gathering in Brussels to sign off on a 130 billion-euro ($171 billion) bailout package for Greece.

Luxembourg Prime Minister Jean-Claude Juncker said he had“no doubt” that the Greek package would be approved and he expected a final decision on March 14.

Yen Climbs

The yen rose 0.1 percent to 82.18 against the dollar after reaching a 10-month low last week. Japan’s currency was little changed at 108.21 against the euro after falling as much as 0.4 percent earlier. A stronger yen damps the value of earnings abroad when repatriated.

Canon lost 0.7 percent to 3,680 yen. Nintendo Co. (7974), a manufacturer of game consoles that gets a third of its sales in Europe, dropped 0.6 percent to 11,470 yen, reversing a 1.8 percent advance earlier.

Real estate companies gained the most among the Topix’s 33 industry groups after Credit Suisse raised Tokyo Land’s target price to 480 yen from 420 yen and maintained its “outperform”rating, citing improved profitability. Stocks also rose after Nomura Holdings Inc. noted a recovery in investor sentiment for real estate funds.

Tokyu Land gained 2.2 percent to 413 yen, while Tosei Corp. (8923)advanced 5 percent to 32,800 yen.

The Topix (TPX) gained 10 percent since bottoming in March last year, when a record earthquake and tsunami struck Japan’s northeast and caused a nuclear disaster. Global monetary easing and reconstruction demand helped boost the value of shares on the index to 1.24 times book value, up from 1.12 in March 2011.

The Nikkei 225 Volatility Index (VNKY) rose 0.1 percent to 22.96, indicating traders expect a swing of about 6.6 percent on the benchmark gauge over the next 30 days. Trading volume on the Nikkei was 25 percent above its 30-day average, according to data compiled by Bloomberg.

The following were among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Auto-parts makers: Koito Manufacturing Co. was among four suppliers of headlights that said they’re being investigated for price fixing by Japan’s Fair Trade Commission. The probe was first reported by Kyodo News and the Nikkei newspaper.

Koito slumped 6.9 percent to 1,341 yen. Mitsuba Corp. (7280) slid 6.3 percent to 770 yen. Stanley Electric Co. dropped 8.9 percent to 1,271 yen, while Ichikoh Industries Ltd. fell 4.2 percent to 158 yen.

Asahi Kasei Corp. (3407 JT), a Japanese maker of synthetic fibers and industrial chemicals, slid 5.4 percent to 490 yen. The stock fell after the company said it will buy U.S.-based Zoll Medical Corp. for $2.2 billion to expand in critical-care products for hospitals and grow sales in Asia.

Asahi Kasei will pay a 24 percent premium from the March 9 closing price to buy out the maker of devices used to revive patients whose hearts have stopped, according to a statement.

Sanwa Holdings Corp. (5929) (5929 JT), a maker of doors and windows, rose 2 percent to 306 yen. The company’s investment rating was raised to “outperform” from “neutral” by SMBC Nikko Securities Inc. The 12-month price target is 350 yen per share.