Wednesday, 16 January 2013 11:05
TOKYO: Japan's Nikkei share average fell on Wednesday and looked set to snap a four-day winning streak as investors took profits on exporters as the yen extended gains, while financial stocks also lost ground.
While exporters led the losses, shares of Boeing Dreamliner suppliers in Japan also came under pressure after All Nippon Airways Co decided to ground all 17 of its Boeing 787 planes for inspection after one of its Dreamliners made an emergency landing in western Japan on Wednesday.
Fuji Heavy Industries dropped 2.7 percent, while GS Yuasa Corp, Mitsubishi Heavy Industries and IHI were down between 2.0 and 4.5 percent.
ANA dipped 0.5 percent.
Among exporters, Toyota Motor Corp fell 1.6 percent, Canon Inc dropped 3.0 percent and Fanuc Corp shed 2.8 percent.
The Nikkei dropped 1.5 percent to 10,713.48 points by the midday break.
The yen, which has fallen more than 1 percent against the dollar so far this year, rebounded for a second day on Wednesday after a warning about its excessive weakness by a Japanese cabinet minister.
Traders said that a pause in the yen's weakening trend triggered selling in shares that had gained recently, which could drag the index below the 10,500-mark in coming days.
"It's a correction. Some exporters' gains are legitimate, but others aren't, so I am selling exporters which have gained but have fundamentals which are still poor, such as Panasonic," said Makoto Kikuchi, the chief executive of Myojo Asset Management.
"Investors may not sell sharply before the BOJ meeting, but if the outcome of the meeting disappoints the market in any way, the index may be dragged down to near 10,200."
The Nikkei has rallied about 24 percent over the past two months, spurred by weakness in the yen after Japan's new leader Shinzo Abe called on the Bank of Japan to adopt aggressive policies to energise the ailing economy, including setting an annual inflation target of 2 percent.
The central bank will hold its policy review on Jan. 21-22.
Hiroichi Nishi, an assistant general manager of equity research at SMBC Nikko Securities, said yen weakness has already been priced in as a positive catalyst.
"Unless the yen weakens further, people may not chase the market higher aggressively," he said.
Among other losers, securities firms, which have been beneficiaries of the strong market, also succumbed to profit-taking. Nomura Holdings fell 1.2 percent and Daiwa Securities Group slipped 2.3 percent.
The dollar last traded at 88.22, pulling away from a 2-1/2-year high of 89.67 set on Monday.
The broader Topix shed 1.1 percent to 896.19 in active trade at the midday break, with 1.86 billion shares changing hands on the main board.
Copyright Reuters, 2013