Japan Stocks Fall After Nation’s Economy Enters Recession

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By Anna Kitanaka and Adam Haigh - Nov 16, 2014

Japanese stocks dropped, with the Topix (TPX) index set for its first decline in five days, as a report showed the nation’s economy unexpectedly fell into a recession.

All but four of the 33 industry groups on the Topix retreated, led by insurers and real estate shares. Toyota Motor Corp., Japan’s No. 1 company by market value, lost 0.6 percent. Central Japan Railway Co. dropped 3.1 percent after SMBC Nikko Securities Inc. cut its rating on the stock. Mitsubishi UFJ Financial Group Inc., the nation’s largest lender, jumped 3.4 percent after reporting profit that beat estimates.

The Topix lost 0.8 percent to 1,389.95 as of 9:22 a.m. in Tokyo after ending last week at its highest level since June 2008. The Nikkei 225 Stock Average declined 0.9 percent to 17,332.23. The yen slipped 0.2 percent to 116.47 per dollar, falling for a third day.

“It’s official, Japan is now in recession,” Jesper Koll, the head of Japan equity research at JPMorgan Chase & Co., said in a Bloomberg TV interview. “Monetary policy is already on full blast to counter against the recession. The next move is fiscal policy with the delay in the VAT hike next year now a virtual certainty.”

Data showed gross domestic product shrank an annualized 1.6 percent for the third quarter after a revised 7.3 percent slide in the previous period. The median estimate of analysts surveyed by Bloomberg was for a 2.2 percent expansion.

Prime Minister Shinzo Abe is expected to use today’s data to decide whether to postpone a sales-tax increase and call an election. Abe was likely to call a vote for Dec. 14 after postponing an unpopular tax boost slated for October 2015, according to people with knowledge of his plan said, who last week asked not to be identified because they aren’t authorized to speak.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net