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Japan's Nikkei sags 2 pct, hits 2-week closing low
September 26, 2012 / 6:40 AM / 5 years ago

Japan's Nikkei sags 2 pct, hits 2-week closing low

* About 55 pct of Topix companies go ex-dividend
    * Nikkei falls to two-week closing low; Topix drops 2 pct
    * Infineon sees weaker Q4
    * Pace of decline in Topix's earnings momentum eases

    By Dominic Lau
    TOKYO, Sept 26 (Reuters) - Japan's Nikkei average fell 2
percent on Wednesday, breaking below the key 9,000 mark and
hitting a two-week closing low, as a mass of companies went
ex-dividend, while concerns over debt-laden Spain also dampened
    About 55 percent of Topix companies have passed the
deadline for buyers of the stocks to be awarded rights to
first-half dividends.
    The Nikkei ended 184.84 points down to 8,906.70,
breaking below its 25-day moving average at 8,983.84. The
benchmark is down 1.1 percent this quarter, which ends this
    Toyota Motor Corp, Nissan Motor Co and
Honda Motor Co were among the companies trading
ex-dividend, down between 2.6 and 4.9 percent. 
    A Toyota executive said the automaker was likely to slow
production in China as anti-Japan sentiment there hurts sales,
while Nissan said it would suspend car production at its Chinese
joint venture from Sept. 27, three days earlier than a scheduled
holiday from Sept. 30 to Oct. 7. 
    A senior dealer at a foreign brokerage said the production
halt should be positive for the carmakers as they could run down
their excess inventories.
    "The fact that these guys have a nice excuse to cut down
production in China where they are running what could be argued
as being slightly excessive inventory levels is good news to the
companies," he said.
    China-related companies have been taken a battering on
concerns over faltering Chinese growth, while anti-Japanese
sentiment in the country in response to a territorial dispute
could add to their difficulties. 
    The Nikkei China 50, made up of Japanese firms with
heavy exposure to the world's second-largest economy, shed 2.9
percent, taking its year-to-date loss to 2.4 percent.
    For the year, the benchmark Nikkei is up 5.3 percent. 
    "We will have reporting season next month. The negative
impact (of the anti-Japan sentiment) will appear on the earnings
of auto and consumer-related companies," said Hisao Matsuura,
equity strategist at Nomura Securities. 
    Still, share prices of China-exposed companies have factored
in much of the bad news, meaning the risk of losses for them
should be limited, he said.
    Japanese auto and parts makers' one-month
earnings momentum -- analysts' earnings upgrades minus
downgrades as a total of estimates -- has deteriorated further
to -8.2 percent from -5.2 percent last month, according to
Thomson Reuters Datastream.
    The pace of decline in Topix's earnings momentum, on the
other hand, slowed to -6.7 percent from -9.1 percent in August. 
    Construction machinery maker Komatsu Ltd and
Hitachi Construction Machinery Co Ltd, whose fortunes
are closely tied to China and global growth, eased 2.8 and 2.6
percent respectively. Their U.S. rival Caterpillar Inc,
the world's largest earth-moving equipment maker, cut its 2015
earnings outlook on Monday.
    Sluggish global growth, despite the U.S. Federal Reserve
launching another round of stimulus moves, is biting into
company earnings.
    On Tuesday, German chipmaker Infineon Technologies
 said sales and profits would fall more than
previously expected in forthcoming quarters. 
    The news weighed on Japanese semiconductor-related firms,
with Advantest Corp, Tokyo Electron Ltd,
Shinko Electric Industries Co Ltd and Dainippon Screen
Manufacturing Co Ltd off between 3.7 and 5.1 percent. 
    The broader Topix index lost 2 percent to 742.54, with 1.46
billion shares changing hands, down from Tuesday's 1.75 billion
and last week's average of 1.85 billion.
    "European troubles are of course in focus, but relatively
stable exchange rates are underpinning stocks. Some investors
could also be buyers for window-dressing purposes as this is the
last trading week of the quarter, but more of that buying might
emerge later in the week," said Kenichi Hirano, operating
officer at Tachibana Securities.
    Protesters clashed with police in Spain's capital on Tuesday
as the government prepared a new round of unpopular austerity
measures for the 2013 budget to be announced on Thursday.
    Spain is at the centre of the euro zone debt crisis on
concerns the government cannot control its finances and those of
highly-indebted regions, bitten by a second recession since 2009
that has put one in four workers out of work.

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