Japan Stocks Fall, Sending Nikkei to Worst Streak in 43 Years
By Masaki Kondo and Satoshi Kawano
July 2 (Bloomberg) -- Japan's stocks fell, pushing the Nikkei 225 Stock Average's losing streak to the longest in 43 years, as a decline in cargo fees and auto sales in India pointed to a slowdown in emerging economies.
Nippon Yusen K.K. dragged an index of shipping lines to its lowest in more than two weeks, while Komatsu Ltd., the world's second-biggest maker of earthmoving equipment, tumbled the most in three months. Suzuki Motor Corp., Japan's second-largest minicar maker, had the sharpest drop in three years after rising gasoline prices curbed demand in India, its biggest market.
``A slowdown in emerging markets looks unavoidable,'' said Toru Kitani, who manages the equivalent of $2.9 billion at Sompo Japan Asset Management Co. in Tokyo. ``A `decoupling' scenario, where emerging markets can continue growth despite a U.S. meltdown, is looking unlikely.''
The Nikkei 225 Stock Average fell 176.83, or 1.3 percent, to close at 13,286.37 in Tokyo, the lowest since April 16. It was the 10th-straight day of decline, the longest since March 1965, according to the benchmark's Web site. The broader Topix index slumped 18.92, or 1.4 percent, to 1,301.15. All but three of 33 industry groups on the Topix tumbled.
The Baltic Dry Index, a measure of shipping costs for commodities, fell the most in a week yesterday on speculation Chinese iron-ore demand is weakening. Meanwhile, Suzuki's Indian sales grew at the slowest pace in four months, the company said.
Japanese companies are becoming increasingly dependent on growth in emerging markets as demand wanes in the U.S. and Europe. Sony Corp., which derives a quarter of its sales from the U.S., last month said it aims to double annual revenue over the next three years from countries including China, India and Russia.
India Sales
Nippon Yusen declined 4.6 percent to 981 yen, while Mitsui O.S.K. Lines Ltd. lost 3.8 percent to 1,437 yen. Kawasaki Kisen dropped 3.2 percent to 970 yen. Shipping lines fell to the lowest since June 13 and had the biggest drop among groups on the Topix.
Suzuki slumped 7.1 percent to 2,275 yen, the sharpest decline since May 2005, while truckmaker Hino Motors Ltd. sank 4.8 percent to 631 yen. Komatsu dived 4.7 percent to 2,760 yen, and Hitachi Construction Machinery Co., the world's biggest maker of giant excavators, fell 4.9 percent to 2,825 yen, the lowest since April 18.
``Places like India, they import a lot and are very dependent on energy imports,'' said Edwin Merner, president of Tokyo-based Atlantis Investment Research Corp., which manages $2 billion in assets. ``Inflation is a big problem in these places. It's negative for both consumers and manufacturers.''
Komatsu's fastest sales growth took place in Asia, the Middle East and Africa last fiscal year, with a 62 percent increase in China, according to the company's earnings report. In contrast, revenue from Japan and the Americas barely rose.
Mobiles, Games
Meanwhile, companies deemed resilient against an economic slowdown extended their rally. NTT DoCoMo Inc., Japan's largest mobile-phone carrier, drugmaker Daiichi Sankyo Co. and Nintendo Co., maker of the Wii game machine, were top gainers among the 100 biggest companies on the Topix.
A gauge tracking pharmaceutical companies had a beta of 0.66 over the past six months, while that of telecommunications and information-technology shares was 0.7, according to Bloomberg data. Betas of less than 1 indicate less volatility than the benchmark index.
Nikkei futures expiring in September retreated 1.3 percent to 13,290 in Osaka and slumped 1.2 percent to 13,315 in Singapore.
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