Japanese Stocks Decline on Weaker-Than-Expected Consumer Prices
By Patrick Rial
Oct. 27 (Bloomberg) -- Japanese stocks fell, led by Mitsubishi UFJ Financial Group Inc., after consumer price gains slowed in September, threatening to delay an interest rate increase that would allow lenders to charge more for loans.
``The CPI was a bit weaker than expected, which cuts the chances of a rate increase by the Bank of Japan,'' said Mitsushige Akino, who oversees $468 million in assets at Ichiyoshi Investment Management Co. in Tokyo. ``Banks are looking for higher rates to expand their margins.''
The Nikkei 225 Stock Average fell 142.53, or 0.9 percent, to 16,669.07 at the 3 p.m. close in Tokyo after gaining 0.4 percent earlier. The Topix index dropped 13.86, or 0.8 percent, to 1650.73.
The Nikkei added 0.1 percent this week, for the longest winning streak since the five weeks ended on April 7. The Topix gained 0.4 percent.
Technology-related stocks such as Matsu****a Electric Industrial Co. declined on concern that a U.S. government report will show later today the growth in the world's largest economy slowed over the past three months.
Ibiden Co. dropped on concern a plan by rival Denso Corp. to enter the diesel particulate filter market in eastern Europe will increase competition in the industry.
Mitsubishi UFJ, the nation's largest lender, dropped 20,000 yen, or 1.3 percent, to 1.51 million. Mizuho Financial Group Inc., the second largest, lost 18,000 yen, or 1.9 percent, to 937,000. Resona Holdings Inc., the fourth biggest, declined 3,000 yen, or 0.8 percent, to 367,000.
Core consumer prices, which exclude fresh food, climbed 0.2 percent in September from a year earlier, down from 0.3 percent in August, the government statistics bureau said. The median forecast of 39 economists surveyed by Bloomberg News was for an increase of 0.3 percent.
Nissan Beats Expectations
Lower-than-expected consumer prices may delay interest rate increases by the Bank of Japan, which would allow commercial lenders to raise their borrowing costs. Japan's key rate is the lowest of the Group of Eight industrial nations, at 0.25 percent.
``With core prices softening, the Bank of Japan will probably postpone a rate increase to the middle of next year,'' said Seiji Shiraishi, chief market economist at Daiwa Securities SMBC Co. in Tokyo.
Matsu****a, the world's biggest consumer electronics maker, lost 45 yen, or 1.8 percent, to 2,530. Fanuc Ltd., the world's biggest factory robot maker, fell 100 yen, or 1 percent, to 9,470. Ricoh Co., Japan's third-biggest color laser printer maker, dropped 75 yen, or 3 percent, to 2,415. Ricoh made 48 percent of its total sales overseas.
Ibiden Drops
``Investors who have a cautious view on the U.S. economic expansion decided to step out of technology shares,'' said Haruo Otsuka, who oversees $870 million at Toyota Asset Management Co. in Tokyo.
Economic growth in the U.S. cooled to a 2 percent annual rate from July through September, the slowest this year, as housing slumped and automakers slashed output to reduce stocks of unsold cars, economists said before a government report today.
Ibiden, which makes ceramic filters for diesel cars, dropped 400 yen, or 6.1 percent, to 6,190. Denso said it will establish a joint venture with Stuttgart-based Robert Bosch GmBH to make diesel particulate filters in eastern Europe.
Nissan, Japan's second-largest automaker, jumped 35 yen, or 2.5 percent, to 1,424.
Nissan reported an unexpected 31 percent jump in second- quarter profit to 164 billion yen ($1.38 billion), helped by the sale of a stake in truckmaker Nissan Diesel Motor Co. and a weaker yen. Analysts in a Bloomberg survey predicted profit of 111.8 billion yen.
Nissan Shatai Co., which assembles Nissan vehicles, climbed 61 yen, or 12 percent, to 578, the best performer among the 1,697 stocks included in the Topix.
Sony Rebounds
Sony Corp., the maker of the PSP portable game console, rose 60 yen, or 1.2 percent, to 4,880.
The company may report net income will more than double to 235.6 billion yen in the year ending March 2008, from 108 billion yen a year earlier, based on the average estimate of 19 analysts surveyed by Thomson Financial. After the market closed yesterday, Sony said it posted a 94 percent slide in net income because of the one-time charge for a record battery recall.
``The share value is actually cheap given the earnings outlook for next year,'' said Seiichiro Iwamoto, who oversees about $260 million at Fuji Investment Management Co. in Tokyo. ``Some investors who judged the worst is over may be buying the stock.''
`No Surprise'
Separately, Credit Suisse Group and Morgan Stanley said today the company's earnings from Bravia televisions are improving. Profit for the year ending on March 31 is forecast to drop 35 percent to 80 billion yen, compared with an earlier estimate of 130 billion yen, the company said last week.
Canon Inc., the world's largest seller of digital cameras, dropped 160 yen, or 2.4 percent, to 6,490.
Canon's record third-quarter profit was not enough to push the shares higher as investors including Ichiyoshi's Akino said the results were in line with expectations. Net income rose 15 percent to 115.6 billion yen on sales of copiers and single- lens-reflex digital cameras and because of a weakening yen, the company said yesterday after the market closed.
``The market has already discounted strong earnings from companies, so Canon's result came as no surprise,'' said Akino.
Nikkei futures expiring in December slid 0.8 percent to 16,690 in Osaka and dropped 0.7 percent to 16,700 in Singapore.
Canon Inc. (7751 JT)
Ibiden Co. (4062 JT)
Matsu****a Electric Industrial Co. (6752 JT)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Mizuho Financial Group Inc. (8411 JT)
Nissan Motor Co. (7201 JT)
Nissan Shatai Co. (7222 JT)
Resona Holdings Inc. (8308 JT)
Sony Corp. (6758 JT)
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