Japanese equities broke a five-day winning streak, with Nikkei 225 stock average ending down marginally as concerns over the electronics and travel industries outweighed strength in bank shares.
The Nikkei 225 fell 0.03 per cent to 11,362.35, recovering some earlier losses caused by a sell-off of chip-related and travel stocks, the latter a reaction to the tsunami that devastated holiday resorts in Thailand and Sri Lanka. The broader Topix index was virtually unchanged at 1,134.61.
NEC Electronics, the specialty semiconductor manufacturer, slumped 5 per cent to Y4,940 after a weekend newspaper report that it was likely to miss its forecast operating profit by 40 per cent. The company said it was halting production for longer than expected at some factories as a result of weak demand for chips.
The market is sensitive to news about the electronics sector where a build-up of inventories is cited by economists as one of the main factors in a recent economic slowdown. The Bank of Japan has said the speed of the recovery of the IT sector will be an important factor in determining the strength of economic growth next year.
Other chip-related companies also fell, with Advantest, which makes equipment used to test memory chips, losing 1 per cent to Y8,690, and Tokyo Electron, a manufacturer of semiconductor production machinery, down the same percentage to Y6,240.
Travel agents were also big losers as they were forced to cancel packages to Phuket, the popular Thai resort devastated, along with coastal regions of India, Sri Lanka and Malaysia, by powerful tsunamis. Newspapers were full of reports about missing Japanese holidaymakers prompting concerns about further cancellations at one of the busiest travel periods of the year.
HIS, Japan’s biggest discount travel agent, fell 3.16 per cent to Y1,995, while Kinki Nippon Tourist, the second largest, dropped 2.3 per cent to Y253.
Banks did better, with Mizuho, Japan’s largest by assets, gaining 0.6 per cent to Y490,000 after raising its full-year profits forecast 62 per cent to Y720bn. The upgrade followed victory in an eight-year court battle to recover Y280bn of taxes and interest from the tax authorities.