Monday, October 7, 2013
Carmakers Hampered By U.S. Fiscal Woes, Stronger Yen
TOKYO (NQN)--Tokyo stocks, led by blue-chip carmakers, fell across the board Monday, with Toyota Motor Corp. (7203) down 1.4% and Mazda Motor Corp. (7261) skidding 2.9%. Subaru brand owner Fuji Heavy Industries Ltd. (7270), which is more sensitive to exchange rates than others, sagged 3.3%.
Although carmakers have been pushing Japanese stocks higher since the end of 2012, investors recently appear to be losing interest. According to a monthly stock report for October released Monday by Quick Corp., the percentage of investors overweight in auto stocks versus the percentage of investors underweight in the sector was plus 33, down five points from the previous survey and the fourth straight monthly decline. An official at a Japanese investment company said domestic auto production will fall in the next fiscal year in reaction to a last-minute jump in demand before the consumption tax hike takes effect next April.
Market players are also beginning to worry the deadlock between Democrats and Republicans over the U.S. budget for fiscal 2014 may harm the U.S. economy. Yoshihiro Okumura, head of research at Chibagin Asset Management Co., said uncertainty is growing over the economic outlook for the U.S., the largest market for Japanese carmakers. Concerns about the U.S. economy are further weighing on carmakers' stocks.
The yen's gradual rise against the dollar potentially has an even larger impact. Concerns are rising that a U.S. default will damage the greenback's credibility. In addition, a chaotic U.S. economy could set back the Federal Reserve's plan to cut its bond purchases. Naoki Fujiwara, a fund manager at Shinkin Asset Management Co., said if the Fed delays scaling back its bond-buying, U.S. interest rates for car loans will fall. But, added Fujiwara, optimism over automotive stocks may start to fade, given previously high hopes that a weaker yen would boost profits.
--Translated from an article by NQN staff writer Hirofumi Takeuchi
(Nikkei Quick News, Oct. 7)