BLBG : Most Japanese Stocks Fall on Commodities Slump, Valuations
Aug. 18 (Bloomberg) -- Most Japanese stocks fell after commodities prices slumped and concern mounted that a five-month global rally made equities expensive.
The country’s main indexes swung between gains and losses throughout the day as China’s benchmark gauge approached levels signaling a bear market, clouding the outlook for a global economic recovery. Mitsubishi Corp., which generates nearly half its revenue from commodities, lost 3 percent. NTT DoCoMo Inc., Japan’s largest mobile-phone operator, added 2.5 percent after Mizuho Financial Group Inc. raised the shares to “strong buy.”
“We were due for a correction, but the market’s overall rising trend is holding up as earnings and the economy are on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $89 billion. “China is the major engine driving the global recovery, so investors focused on the nation’s stock market to get an indication of how the economy is faring.”
About four stocks declined for every three that rose on the Topix index, which was little changed at 949.66 at the close of trading in Tokyo. The Nikkei 225 Stock Average added 0.2 percent to 10,284.96 after swinging between gains and losses 17 times.
China’s Shanghai Composite Index rose 1.4 percent after earlier slumping 1.5 percent. The benchmark plunged 5.8 percent yesterday, the biggest decline since November. That brought the gauge within 3 percentage points of the 20 percent drop that signals a bear market.
Commodities Slump
Mitsubishi Corp. retreated 3 percent to 1,865 yen. Sumitomo Metal Mining Co., Japan’s biggest producer of nickel and gold, lost 1 percent to 1,435 yen. Mitsui & Co., which generates more than half its profit from metals and energy, slipped 0.7 percent.
A measure of six metals, including copper and zinc, traded on the London Metal Exchange fell 2.7 percent yesterday to the lowest level in a week. Aluminum retreated 1.5 percent. Crude oil fell to the lowest price this month in trading yesterday.
Mitsubishi Electric Corp., a maker of factory-automation equipment, lost 2.3 percent to 691 yen. Toshiba Corp. Japan’s biggest maker of nuclear reactors in terms of power capacity, fell 1.1 percent to 453 yen. Shares of both climbed more than 80 percent from March lows, outpacing gains by the overall market.
The Nikkei rallied 50 percent from a 26-year low in March through Aug. 14 as government stimulus measures spurred a pick- up in production and corporate earnings. The surge drove companies in the benchmark to 47 times estimated earnings, from as low as 10 times last year.
‘Market Lull’
“We’re headed for a temporary lull in the market because the pace of the rally has been extreme,” said Kiyoshi Noda, a senior fund manager at Tokyo-based MU Investment Co., which manages the equivalent of $13 billion. “Investors are looking at China and getting a bit worried about the outlook for overseas demand.”
NTT DoCoMo gained 2.5 percent to 142,400 yen, its sharpest climb since May 13, after Atsuo Takahashi at Mizuho raised the rating on the shares to “strong buy” from “hold,” citing rising earnings from the use of wireless Internet. Rival Softbank Corp. slipped 0.5 percent after the analyst cut the stock to “hold.”
Factory-engineering company IHI Corp. climbed 0.6 percent to 175 yen after the Nikkei newspaper said the company won an order to build a bridge in Vietnam. Sumitomo Mitsui Construction Co., IHI’s partner in the project according to the newspaper, jumped 13 percent.
