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05-06-2012, 10:27 AM
Does this call for a value investing opportunity or is it a value trap? Are there still many zombies around in Japan?
Japan shares skid, Topix hits 28-year low
Published: Monday, 4 Jun 2012 | 3:20 AM ET
By Sophie Knight
TOKYO, June 4 (Reuters) - Japan's shares fell sharply on Monday, with the broader Topix index hitting a 28-year low, as investors rushed to sell riskier assets on disappointing U.S. jobs data, deepening debt woes for the euro zone and slowing Chinese growth.
The more tech-heavy Nikkei index also slid and has now dropped 19 percent from a one-year high marked on March 27, flirting with a fall into bear market territory, often defined as a slide of 20 percent within two months.
The broader Topix index lost as much as 2.4 percent to 692.18, a level not seen since late 1983. Last week, it fell for a ninth straight week, marking its longest such run since 1975.
"This shows the situation really is very serious," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley.
"Although foreign investors might be focused on the Nikkei average, the Topix index is a better indicator of the Japanese market as it's not being swung around by a few big players," he said.
Major exporters suffered steep losses as the prospect of slowing demand for their products was exacerbated by strength in the safe-haven yen versus the euro and the dollar.
Mazda Motor Corp , which has high exposure to Europe, skidded 7.3 percent, while Toyota Motor Corp , Nissan Motor Co and Honda Motor Co Ltd shed between 3.5 and 3.7 percent.
The Topix ended the day down 1.9 percent at 695.51 in moderate trade with 1.7 billion shares changing hands. The Nikkei dropped 1.7 percent to 8,295.63 to a six-month low.
Canon Inc tumbled 5.2 percent to 2,893 yen, breaking the 3,000 yen level for the first time since July 2009 after JP Morgan downgraded the camera and printer maker's rating by two notches and halved its target price. The company said it would buy back 50 billion yen worth of its own shares after the market close.
Sony Corp , the maker of Walkman and Playstation, fell 1.7 percent to hit a fresh 32-year low.
Increasing alarm about the potential impact of the euro zone's worsening fiscal health and the shaky state of the region's banks have helped to push the Nikkei deep into "oversold" territory, with its 14-day relative strength index at 23.54. Thirty or below is deemed oversold.
"From a valuation view point, is attractive, and investors almost seem to agree, but they don't want to buy now," said Hisao Matsuura, equity strategist at Nomura.
The average price-to-book ratio of Nikkei companies now stands at 0.9, compared to 2.0 for S&P 500 companies while the Topix's 12-month forward price-to-earnings ratio has fallen to 10.9, a level not seen since November 2008, data from Thomson Reuters Datastream showed.
U.S. jobs growth braked sharply for a third straight month in May and the jobless rate rose for the first time in nearly a year, with 69,000 jobs added to payrolls last month, the least since May last year.
The weak data followed poor Chinese manufacturing and dismal European data on factory activity, rattling markets that had already been on edge over the deepening euro-zone crisis. The numbers fuelled speculation that the U.S. Federal Reserve would have to launch further monetary stimulus to shore up growth.
"If Europe started talking about fiscal integration, even if it was just a stepping stone and the process would take 10 years, the markets would calm down," said Yuuki Sakurai, CEO of Fukoku Capital Management. "But there isn't any simple way to solve the current problems."
Investors took refuge in defensive stocks, with the food sector running contrary to the market with a 0.3 percent gain. Condiment and food product maker Ajinomoto Co Inc climbed 3.2 percent after JP Morgan upgraded its rating to "overweight" and hiked its target price.
(Additional reporting by Dominic Lau; Editing by Edwina Gibbs)
((sophie.knight@thomsonreuters.com)(+81 3 6441 1833 Reuters Messaging: sophie.knight.thomsonreuters@reuters.net))
Keywords: MARKETS JAPAN STOCKS/
© Reuters 2012. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
Japan shares skid, Topix hits 28-year low
Published: Monday, 4 Jun 2012 | 3:20 AM ET
By Sophie Knight
TOKYO, June 4 (Reuters) - Japan's shares fell sharply on Monday, with the broader Topix index hitting a 28-year low, as investors rushed to sell riskier assets on disappointing U.S. jobs data, deepening debt woes for the euro zone and slowing Chinese growth.
The more tech-heavy Nikkei index also slid and has now dropped 19 percent from a one-year high marked on March 27, flirting with a fall into bear market territory, often defined as a slide of 20 percent within two months.
The broader Topix index lost as much as 2.4 percent to 692.18, a level not seen since late 1983. Last week, it fell for a ninth straight week, marking its longest such run since 1975.
"This shows the situation really is very serious," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley.
"Although foreign investors might be focused on the Nikkei average, the Topix index is a better indicator of the Japanese market as it's not being swung around by a few big players," he said.
Major exporters suffered steep losses as the prospect of slowing demand for their products was exacerbated by strength in the safe-haven yen versus the euro and the dollar.
Mazda Motor Corp , which has high exposure to Europe, skidded 7.3 percent, while Toyota Motor Corp , Nissan Motor Co and Honda Motor Co Ltd shed between 3.5 and 3.7 percent.
The Topix ended the day down 1.9 percent at 695.51 in moderate trade with 1.7 billion shares changing hands. The Nikkei dropped 1.7 percent to 8,295.63 to a six-month low.
Canon Inc tumbled 5.2 percent to 2,893 yen, breaking the 3,000 yen level for the first time since July 2009 after JP Morgan downgraded the camera and printer maker's rating by two notches and halved its target price. The company said it would buy back 50 billion yen worth of its own shares after the market close.
Sony Corp , the maker of Walkman and Playstation, fell 1.7 percent to hit a fresh 32-year low.
Increasing alarm about the potential impact of the euro zone's worsening fiscal health and the shaky state of the region's banks have helped to push the Nikkei deep into "oversold" territory, with its 14-day relative strength index at 23.54. Thirty or below is deemed oversold.
"From a valuation view point, is attractive, and investors almost seem to agree, but they don't want to buy now," said Hisao Matsuura, equity strategist at Nomura.
The average price-to-book ratio of Nikkei companies now stands at 0.9, compared to 2.0 for S&P 500 companies while the Topix's 12-month forward price-to-earnings ratio has fallen to 10.9, a level not seen since November 2008, data from Thomson Reuters Datastream showed.
U.S. jobs growth braked sharply for a third straight month in May and the jobless rate rose for the first time in nearly a year, with 69,000 jobs added to payrolls last month, the least since May last year.
The weak data followed poor Chinese manufacturing and dismal European data on factory activity, rattling markets that had already been on edge over the deepening euro-zone crisis. The numbers fuelled speculation that the U.S. Federal Reserve would have to launch further monetary stimulus to shore up growth.
"If Europe started talking about fiscal integration, even if it was just a stepping stone and the process would take 10 years, the markets would calm down," said Yuuki Sakurai, CEO of Fukoku Capital Management. "But there isn't any simple way to solve the current problems."
Investors took refuge in defensive stocks, with the food sector running contrary to the market with a 0.3 percent gain. Condiment and food product maker Ajinomoto Co Inc climbed 3.2 percent after JP Morgan upgraded its rating to "overweight" and hiked its target price.
(Additional reporting by Dominic Lau; Editing by Edwina Gibbs)
((sophie.knight@thomsonreuters.com)(+81 3 6441 1833 Reuters Messaging: sophie.knight.thomsonreuters@reuters.net))
Keywords: MARKETS JAPAN STOCKS/
© Reuters 2012. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
