Tokyo: Japan’s Nikkei average fell 1.5% on Tuesday, 8 April, dragged down by chip-related shares such as Tokyo Electron Ltd on a weak industry outlook.
Japan’s second-largest retailer Aeon Co Ltd posted its biggest daily fall in almost four years as many analysts expressed doubts about the midterm growth plan the firm unveiled after reporting its first profit fall in a decade.
Financial shares were also among the hardest hit, including Japan’s second-biggest bank Mizuho Financial Group amid lingering credit concerns.
“There is no factor to push up the market beyond this level,” said Harushige Kobayashi, head of research at Maruwa Securities.
“Concerns about hitting a new bottom have eased but we have to brace for earnings and outlooks by Japanese companies and subprime problems are not over yet.”
The Nikkei ended down 199.80 points at 13,250.43, while the broader Topix was down 1.8% at 1,282.69.
“Recent gains had been mostly led by short-covering in futures, and the cash market had not attracted buyers, so there should be a limit to the upward move,” said Toshio Sumitani, general manager of investment research of Tokai Tokyo Securities.
Mizuho Financial slid 4.1% to 403,000 yen. Japan’s largest bank Mitsubishi UFJ Financial Group fell 2.3% to 968 yen, and No. 3 bank Sumitomo Mitsui Financial Group shed 3.8% to 745,000 yen.
Cashing in chips
Chip-making equipment manufacturers fell sharply after Goldman Sachs cut its 2008 investment outlook for such gear to a 30% year-on-year decline from the previous estimate of a 20% fall, citing severe financial conditions at client memory chip makers.
“We believe the market has not yet recognised the severe investment situation for memory chip makers,” Goldman analyst Shin Horie wrote in a research note.
Tokyo Electron fell 3.8% to 6,110 yen and chip-tester maker Advantest Corp slipped 5.5% to 2,735 yen, making them the two biggest drags on the Nikkei.
Disco Corp fell 5.4% to 4,360 yen. The Nikkei business daily said the maker of semiconductor cutting saws will likely post a group recurring profit of 19.5 billion yen for the year ended 31 March, down 1% and missing its forecast of 21 billion yen.
Retailer Aeon fell 7.5% to 1,229 yen after analysts cast doubts on whether the retailer can meet its mid-term growth plan, which the management said was conservative.
Aeon said it aimed for 250 billion yen in operating profit for the year ending in February 2011, compared with 156 billion yen in the year just ended.
“Currently, we expect the improvement in earnings to fall short of company projections, and believe the figures in the mid-term plan are mostly designed to act as a target,” Credit Suisse analyst Katsura Kihara wrote in a research note.
Aeon, which runs a sprawling retail operations including Jusco stores, posted an 18% decline in operating profits for the year ended in February on sluggish sales in Japan and at its struggling US apparel unit, Talbots Inc.