Japan's broad-based Topix index fell to its lowest close in 19 months on Tuesday as the yen's strength against the dollar hurt shares of exporters such as automakers, while weakness in financial shares weighed on confidence.
The benchmark Nikkei average hit a seven-week low but analysts said the Topix has been hit particularly hard by a downbeat performance in the banking sector on worries about stricter global banking regulations, and by a series of equity financing including defensive stocks such as Tokyo Electric Power Co.
Top lender Mitsubishi UFJ Financial Group posted its lowest close since April 2003, while Sumitomo Mitsui Financial Group, Japan's No 3 bank, hit its lowest in about seven years, before recouping ground to end the day slightly higher. So far this year the Topix has lost nearly 12 percent, roughly in line with MSCI Japan. That compares with a gain by the Standard & Poor's 500 Index of about 6 percent in the same period, and a rise by the MSCI index of Asia-Pacific stocks outside Japan of about 13 percent.
"What's triggered the recent selling of Japanese stocks is not really worries about the economy or earnings. Rather, it's the strong yen and a number of equity financing including those by companies that had been considered 'defensive' stocks," said Soichiro Monji, chief strategist at Daiwa SB Investments.
"But the Nikkei has held above its September lows, helped by stronger earnings by electronics makers and other exporters that have heavier weight on the benchmark." The Topix ended the day down 0.02 percent at 803.12, its lowest finish since April 2009. The benchmark Nikkei added 0.1 percent to 9,159.98, after falling as low as 9,123.62, its lowest intraday level since September 9.
Overseas investors have been only tepid buyers of Japanese equities over the past few months, having bought a net 40.8 billion yen ($506.6 million) in Japanese shares from late August until late October, according to the Ministry of Finance's weekly capital flows data. Tetsuro Miyachi, a senior portfolio manager for Franklin Templeton Investments Japan, said a perception that the Bank of Japan's monetary easing had been insufficient and frequent changes in Japan's prime minister were likely contributing to overseas investors' lack of enthusiasm for Japanese shares.
He said overseas investors' subdued investment in Japanese shares may persist for another year or two. Mitsubishi UFJ Financial Group finished the day flat at 367 yen, and Sumitomo Mitsui Financial Group lost as much as 1.5 percent before ending up 0.5 percent at 2,372 yen. Second-ranked Mizuho Financial Group also ended flat at 116 yen, after falling as much as 1.7 percent at one stage.
Among exporters, Honda Motor Co lost 2.3 percent to 2,725 yen and Mazda Motor Corp fell 1 percent to 202 yen. Sony Corp slipped 0.9 percent to 2,627 yen and Advantest fell 1.3 percent to 1,474 yen. Trade slowed on the Tokyo exchange's first section, with 1.55 billion shares changing hands, its lowest in a week. Declining stocks outnumbered advancers 973 to 512.
Comments
Comments are closed.