Tokyo: Shares fall as Yaskawa leads tech sell-off after earnings view disappoints

[TOKYO] Japanese shares ended lower on Monday, dragged down by sharp losses in Yaskawa Electric after the industry bellwether's earnings outlook failed to meet the market's expectations, prompting a sell-off in other tech stocks.

Nikkei average fell 0.77 per cent to close at 29,538.73. It has been in a holding pattern after hitting a 30-and-a-half-year high in mid-February, with a break of either its March 18 high of 30,485 or March 24 low of 28,379, seen as needed for a new trend to emerge.

The broader Topix ended 0.25 per cent lower at 1,954.59.

Shares of robot maker Yaskawa Electric, a leading indicator on Japanese manufacturers' earnings trends, lost 7.11 per cent after its February quarter earnings fell short of investor expectations.

The company expects 54.5 per cent jump in its operating profit to 42 billion yen (S$514.8 million) in the current financial year, nearly meeting analysts' forecast of 43 billion yen.

Other technology firms also fell, with Nitto Denko, Shin-Etsu Chemical and Fanuc dropping between 3.7 per cent and 1.76 per cent.

"Today's investor reaction to Yaskawa stock suggested that the market expectations for the company was very strong," said Takatoshi Itoshima, strategist at Pictet Asset Management.

"Investors sold other tech shares because Yaskawa's result implicated disappointing earnings for others. But if they could confirm strong earnings of other firms, they would buy them back."

Supermarket operator Aeon also lost 4.08 per cent, after subdued quarterly earnings.

More retailers will release their earnings this week while the country's top companies will start later this month.

Toshiba rose 6.21 per cent after the Nikkei financial daily said late Friday state-backed Japan Investment Corp (JIC) and the Development Bank of Japan (DBJ) would join the US$20 billion takeover bid by CVC Capital Partners.

Small golf shaft maker Graphite Design jumped 8.12 per cent, after Hideki Matsuyama become the first Japanese man to win a Masters victory at Augusta National.

Golf-related service firm Value Golf gained 13.01 per cent.

REUTERS