Japanese Stocks Decline, Led by Mobile Carriers, Oil Explorers

Japanese stocks fell, dragged down by mobile carriers after Prime Minister Shinzo Abe called for lower phone rates.

NTT Docomo Inc., KDDI Corp. and SoftBank Group Corp. sank at least 5.5 percent after Abe said reducing the burden on households from mobile phone fees is an important issue to tackle. Energy explorer Inpex Corp. declined 5 percent after Goldman Sachs Group Inc. said oil prices could fall as low as $20 a barrel. Kansai Electric Power Co. climbed 1.5 percent as utilities led gains on the Topix index. Shipper Kawasaki Kisen Kaisha Ltd. jumped 1.8 percent after Mitsubishi UFJ Morgan Stanley Securities Co. raised its investment rating.

The Topix slipped 1.2 percent to 1,462.41 at the close of trading in Tokyo, swinging from a gain of 0.5 percent after last week capping its biggest weekly increase in almost two months. Volume was 29 percent below the 30-day average. The Nikkei 225 Stock Average dropped 1.6 percent to 17,965.70. Both the Federal Reserve and Bank of Japan are holding policy meetings this week.

“Calling costs are high and while that’s good news for consumers, the stocks are falling on the same theme,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. “Investors are passing over the market ahead of the BOJ and FOMC policy meetings.”

Rate Bets

Heightened volatility in financial markets since China unexpectedly devalued its currency last month and signs the country’s economic slowdown is deepening have injected extra uncertainty into the debate over whether the Fed will raise U.S interest rates Sept. 17. While futures traders see a 28 percent chance of an increase, economists surveyed by Bloomberg are about evenly split on whether the Fed will move.

 

China’s industrial output rose 6.1 percent in August from a year earlier, the National Statistics Bureau said Sunday, below the 6.5 percent median estimate of economists surveyed by Bloomberg. Fixed-asset investment climbed 10.9 percent in the first eight months, compared with a median projection of 11.2 percent. The weaker industrial and investment figures underscore the challenge the government faces in meeting its growth target of 7 percent this year, as exports decline and producer price deflation deepens.

“The slowdown in China is continuing,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. “The fact that investment is slowing down is especially worrying, and it’s negative if you see it as proof that China’s policies have been unsuccessful so far.”

The Bank of Japan will maintain its policy stance at a meeting Tuesday, according to all but two of 35 analysts polled by Bloomberg. The BOJ will expand easing on Oct. 30, according to 11 economists in the Bloomberg survey taken from Sept. 7-10. Of the total respondents, 13 said they don’t expect any stimulus at all.

Enthusiasm Lacking

E-mini futures on the S&P 500 Index lost 0.1 percent after the underlying measure rose 0.5 percent on Friday.

“There’s a lack of enthusiasm,” said Andrew Clarke, director of trading at Hong Kong brokerage Mirabaud Asia Ltd. “We have the BOJ tomorrow, the Fed Thursday, and the question is what does China do next? Numbers over the weekend were not good out of the China. I guess some expect some sort of easing measures.”

NTT Docomo plunged 9.8 percent, while KDDI tumbled 8.6 percent. SoftBank slumped 5.5 percent. Mobile phone bills have become too high and are a burden on family budgets, Abe said at an economic conference on Friday, Kyodo news service reported.

Inpex dropped 5 percent, the most since January. Japan Drilling Co. lost 0.9 percent. Hokuriku Electric Power Co. gained 3.3 percent, Kansai Electric rose 1.5 percent and Shikoku Electric Power Co. added 2.8 percent.

While $20 a barrel oil is not Goldman’s base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, the bank said in a report e-mailed Friday, while trimming its Brent and WTI crude forecasts through 2016.

Kawasaki Kisen gained 1.8 percent, with the Topix Marine Transportation Index rising 0.3 percent. Mitsubishi UFJ raised its rating on the stock to overweight from neutral.

Source: Bloomberg