Tokyo Market: Exporters lead drop as yen strengthens

JAPANESE stocks may fall this week, led by exporters, as the strong yen threatens to reduce the earnings they make from sales overseas. Bonds on the other hand are likely to rise as investors shift money into fixed- income securities as a haven.

"There isn't much to see next week on the positive side," said Paul Migliorato, at Commerz Securities (Japan). "The blue chips will remain under pressure - because of the strong yen - and there is a lot of uncertainty about US markets."

The Nikkei 225 index had its worst week for just over a year, dropping 777.6 points, or 4.3 per cent, to 17,084.24. The Topix index fell 4 per cent. The electrical machinery Topix sub-index, which contains exporters such as Canon and Hitachi, plunged 5 per cent..

"As long as stocks are weak, bonds will be supported,'' said Jun Fukashiro, fund manager at NCB Investment Management. Last week the yield on the 10-year benchmark government bond rose two basis points to 1.805 per cent.

Investors' main concern is a rise in the value of the yen, which has gone up 5.6 per cent to a high of 114.11 against the dollar over the past three weeks on demand from foreign investors wanting to buy Japanese stocks. This, however, decreases the likelihood that Japanese investors will put money overseas, encouraging them to invest domestically instead - in bonds.

"We're reducing foreign bonds and buying domestic bonds,'' said Keisaku Ujihara, at Sanwa Asset Management.

Companies such as Sony and Canon could slip, concerned that the US central bank may raise interest rates to curb inflation, thereby reducing consumer sentiment. Each one-yen fall in the value of the dollar means exporters lose several billion yen in operating profit. Canon, Japan's largest maker of office equipment, exports 83 per cent of its products, while Sony, Japan's second-largest consumer electronics company, exports 68 per cent of its goods. Concern about earnings at those companies has kept many foreign investors away from the stock market.

"It's hard to see anything that's going to change sentiment on the positive side," said Mr Migliorato. "People will try and find where the new level of support is and once we get through 17,000 [on the Nikkei], we see people saying 16,500."

"Everyone is looking into the dark, trying to figure out when the yen will stop rising," said Hitoshi Ichio, strategist at Commerz Securities (Japan). "Selling pressure on exporters won't go away as long as currency concern remains."

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

‘We won’t stop until Syria is back to normal’

Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
Fifa corruption: Strip Qatar of the World Cup? Not likely

Strip Qatar of the World Cup? Not likely

But if a real smoking gun is found, that might change things, says Tom Peck
Twenty two years later Jurassic Park series faces questions over accuracy of the fictional dinosaurs in it

Tyrannosaurus wrecked?

Twenty two years on, Jurassic Park faces questions over accuracy
The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

The inside story of how Bill Clinton built a $2bn global foundation...

... and how it may undermine Hillary's chances in 2016
Genes greatly influence when and how many babies a woman will have, study finds

Mother’s genes play key role in decision to start a family

Study's findings suggest that human fertility is still evolving
12 best olive oils

Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

Benitez full of emotion at Bernabeu homecoming

There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
England can win the Ashes – and Elvis Presley will present the urn

England can win the Ashes – and Elvis will present the urn

In their last five Test, they have lost two and drawn two and defeated an India side last summer who thought that turning up was competing, says Stephen Brenkley
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)