2013.08.1506:10:54UTC+00Japan shares decline amid surging yen, fed tapering concern

Japanese shares dash down, with the Topix index halting a two-day increase, as exporters pulled back after the yen powered up and amid bolstering expectations the U.S. Federal Reserve will trim down stimulus in September.

Toyota Motor Corp., Asia's largest car maker, relinquished 0.6 percent. Kubota Corp., a tractor maker that gets 23 percent of its sales from North America, missed 2.2 percent after rival Deere & Co. forecast a drop in U.S. farm revenue. Nikon Corp. sag down 2.8 percent on a report the camera maker will take part in a joint venture to improve production technology for stem cells.

“Investors are taking profit partly because of the concerns about tapering, but also because we’ve had a weaker yen the past few days and stocks were up,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees the equivalent of $6.5 billion. “If the Fed begins tapering when the economy still isn’t very strong, then even though Japanese stocks should benefit as the yen will likely weaken, the market may be unable to avoid risk-off sentiment if U.S. stocks plunge.”

Tax Debate

Japanese shares extended losses after Chief Cabinet Secretary Yoshihide Suga said Prime Minister Shinzo Abe has not given instructions on lowering the corporate tax rate. The Nikkei newspaper reported on Aug. 13 that Abe had called for study on cutting the levy on businesses as a counterweight to raising the sales tax, citing unidentified people in the government. The Topix rallied 2 percent that day.

Stimulus Poll

The U.S. central bank will probably cut its $85 billion in monthly bond purchases at its meeting on Sept. 17-18, according to 65 percent of economists surveyed by Bloomberg from Aug. 9 to Aug. 13. In a survey last month, half of economists predicted a reduction in September.

Summer Lull

Daily trading volume on the Topix fell to the lowest this year on Aug. 12 and has remained near that level as investors take summer vacations. About 2.2 billion shares were traded yesterday, below the about 3.5 billion average for this year. The measurer's 30-day historical volatility was at 29.83 yesterday, compared with its five-year median of 19.42.

The Topix exchanged at 1.12 times book value yesterday, compared with 2.48 for the S&P 500 and 1.73 for the Stoxx Europe 600 Index.