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Japanese Stocks Extend Losses After BOJ Adds Stimulus

12 Jul 2012
July 12 (Bloomberg) -- Japanese stocks fell for a sixth day, with the Nikkei 225 (NKY) Stock Average extending its longest losing streak since April, as the Bank of Japan’s unexpected decision to increase asset purchases failed to buoy investor sentiment.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, fell 1.8 percent. Toyota Motor Corp. (7203), Asia’s top carmaker by market value, slid 1.8 percent as the yen rose. Tokyo Electric Power Co. (9501), owner of the crippled Fukushima Dai-Ichi nuclear plant, fell to a record low after a report it will have to pay 1 trillion yen ($12.6 billion) in decontamination costs. Asahi Glass Co. dropped 6.8 percent after cutting its operating profit forecast.

The Nikkei 225 fell 1.5 percent to 8,720.01 at the close inTokyo after paring losses briefly on the BOJ’s decision. It was the biggest drop since June 8. Volume was 20 percent above the 30-day average. The broader Topix Index lost 1.3 percent to 747.49, with almost four stocks falling for each that gained.

“The BOJ doesn’t want to do much quantitative easing, but it’s going through the motions,” said Ichiro Takamatsu, a fund manager at Tokyo-based Bayview Asset Management Co., which oversees 150 billion yen ($1.9 billion) “The BOJ still did its part because the market consensus was for no action.”

The Topix rebounded 7.5 percent since June 4, when it closed at its lowest since 1983, after euro leaders agreed to ease bailouts for lenders and on optimism central banks around the world will ease policy.

The gain has boosted the average price of shares on the Japanese gauge to 0.9 times book value, compared with 2.1 times for the Standard & Poor’s 500 Index (SPXL1) and 1.4 times for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.

BOJ Action

The BOJ today expanded its asset-purchase fund to 45 trillion yen from 40 trillion yen while paring a loan facility by 5 trillion yen, according to a policy statement released in Tokyo today. Ten of 17 economists surveyed by Bloomberg News had predicted no further easing.

Banking shares extended losses after the central bank’s move. Mitsubishi UFJ fell 1.8 percent to 379 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, dropped 2.1 percent to 2,546 yen.

Exporters slid as the yen strengthened after briefly reversing gains against the dollar and euro. Toyota lost 1.8 percent to 3,025 yen. Sony Corp. (6758), the nation’s top exporter of consumer electronics, dropped 2.4 percent to 999 yen.

Futures on the Standard & Poor’s 500 Index fell 0.4 percent today. The equity gauge closed little changed in New Yorkyesterday, erasing losses in the final hour of trading as investors sifted through minutes of a Federal Reserve meeting for hints of additional stimulus.

The Nikkei 225 Volatility Index (VNKY) rose 6.1 percent to 19.94, indicating traders expect a swing of about 5.7 percent on the benchmark gauge over the next 30 days.

Tepco’s Bill

Tokyo Electric dropped 2.7 percent to 146 yen, a record low. Japan will request that the utility will foot a 1 trillion yen bill for decontamination costs for two years through March 2013, Asahi reported, without citing anyone.

Asahi Glass fell 6.8 percent to 483 yen, the second-biggest drop on the Nikkei 225, after the company cut its forecast for fiscal-year operating profit by 29 percent.

Among stocks that rose, Best Denki Co. surged 12 percent to 172 yen on a report Yamada Denki Co. will acquire the electronics retailer. Yamada Denki slid 0.1 percent to 3,565 yen.

Shionogi & Co. rose 4.5 percent to 1,149 yen, leading gains on the Nikkei 225. The shares advanced after the company’s experimental drug beat the world’s best-selling treatment for HIV in clinical trials.