November 9, 2012 / 6:50 AM / 5 years ago

Nikkei falls to 4-week closing low on U.S. fiscal worries

* Nikkei falls for 5th straight day, down 3.2 pct this week
    * 60 pct of Nikkei firms miss results expectations so far

    By Dominic Lau
    TOKYO, Nov 9 (Reuters) - Japan's Nikkei fell a four-week
closing low on Friday, led by exporter shares, as a looming U.S.
fiscal crisis threatened to tip the world's largest economy into
recession and as uncertainty over a Greek bailout rekindled
worries about the euro zone.
    Exporters, which already face slowing demand for their
products due to sluggish global growth, would suffer further
hardship should the U.S. fall into recession on the back of the
'fiscal cliff'.
    Some $600 billion worth of spending cuts and tax hikes would
take effect in the new year if U.S. President Barack Obama and
Congress failed to agree a deal.
    These concerns weighed on the dollar against the yen,
which traded at 79.55 yen to the greenback, not far from
Thursday's high of 79.32, a double-whammy to exporters.
    Among the exporters that headed lower were construction
machinery maker Komatsu Ltd, camera and printer maker
Canon Inc, camera maker Nikon Corp and
automaker Suzuki Motor Corp, down between 0.8 and 2
    The Nikkei ended 0.9 percent lower at 8,757.60,
falling for the fifth straight session, and was down 3.2 percent
this week, its worst weekly performance in four weeks. But the
benchmark is still up 3.6 percent this year.
    The U.S. fiscal issue "is a major concern for investors and
the market may fall further next week when Congress reconvenes
on November 13," said Eiji Kinouchi, chief technical analyst at
Daiwa Securities.
    He said Japan's stock market could face further pressure and
volatility next week as U.S. markets are likely to fall as some
companies go ex-dividend, adding that investors should watch
U.S. stocks with high dividend yields.
    The re-emergence of macro-economic concerns, including the
uncertainty whether Greece will get more international aid and
weak German exports data, comes amid a weak quarterly earnings
season that has seen 60 percent of the 134 Nikkei companies that
have reported so far undershoot market expectations.
    That compared with 54 percent in the previous quarter,
according to Thomson Reuters StarMine.
    Software maker Trend Micro Inc dropped 4.5 percent
on expectations that its fourth-quarter earnings would remain
weak after it posted a 17.2 percent year-on-year decline in
third-quarter operating profit.
    The broader Topix index lost 0.6 percent to 730.74
in light trade, with 1.17 billion shares changing hands, down
from Thursday's 1.57 billion and last week's average of 1.8
    Many companies have cut their earnings outlooks. Among them
were online game provider Nexon Co Ltd, Sumitomo Rubber
Industries Ltd and consumer credit firm Credit Saison
Co Ltd.
    Nexon slid 16.4 percent to a record closing low, Sumitomo
Rubber sank 6.7 percent and Credit Saison lost 2.5 percent.
    "Investors were overly optimistic that they had thought that
the market would price in the U.S. election result and would buy
Japanese stocks whose valuations are cheap," said Masatoshi
Sato, a senior strategist at Mizuho Investors Securities.
    "It's too early to price in all the negative factors. The
market may not pick up unless the index hits bottom around the
psychological support level of 8,500."
    The Topix index carries a 12-month forward price-to-earnings
ratio of 11.3, cheaper than the U.S. S&P 500's 13 but
slightly more expensive than the pan-European STOXX Europe 600's
 11, data from Thomson Reuters Datastream showed.
    Nippon Telegraph and Telephone Corp climbed 4.2
percent after the fixed-line operator unveiled its midterm
management plan, even though it had also cut its operating
profit forecast for the business year.
    A Tokyo-based analyst who declined to be named said
investors had to dig deep to find the companies that are still
performing well.
    "It's not easy time but there are companies doing relatively
better ... It's stock-picker central," he said.
    Among them was mobile games developer Gungho Online
Entertainment Inc, which reported a 150 percent
year-on-year increase in operating profit for the nine months
ended September. The stock jumped 12.7 percent on Friday, and
has surged nearly 170 percent so far this year.
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