Japanese Stocks Advance, Reversing Slump as Government Acts to Weaken Yen
Sept. 15 (Bloomberg) -- Bloomberg's Mike Firn reports from Tokyo about Japan's intervention in the foreign-exchange market for the first time since 2004 to curbe a surge in the yen that threatens an export-led recovery. Finance Minister Yoshihiko Noda told reporters in Tokyo that the move was unilateral. Bloomberg's Mark Barton also speaks. (Source: Bloomberg)
Japanese stocks rebounded in a whiplash session after the government intervened in the foreign- exchange market to weaken the yen from a 15-year high, boosting the earnings outlook for exporters.
Toyota Motor Corp. and Honda Motor Co., carmakers that earn more than 70 percent of their revenue abroad, both gained more than 3.5 percent. Canon Inc., the world’s biggest camera maker, advanced 1.9 percent. Finance Minister Yoshihiko Noda confirmed the currency intervention this morning, following a party vote yesterday affirming Naoto Kan as prime minister.
The Nikkei 225 Stock Average jumped 2.3 percent to 9,516.56 at the close in Tokyo, reversing a decline of 1.1 percent. The swing from today’s low to high was the largest since March 30, 2009. The broader Topix index climbed 1.7 percent to 848.64, with more than three times as many shares advancing as declining.
“Concern about the yen’s appreciation was the biggest negative factor for the Japanese stock market,” said Yoshihisa Okamoto, who helps oversee about $34 billion at Tokyo-based Mizuho Asset Management Co. “The Nikkei Average could soon recover to 10,000.”
The Nikkei last closed above that level on June 22, and today’s climb was the largest since July 28. The Topix had fallen 8 percent this year to yesterday, the biggest drop among benchmark indexes for the world’s 15-largest stock markets except China, as the stronger yen threatened to cut the value of overseas income at Japanese companies when repatriated.
Yen Plunges
Toyota, the world’s biggest carmaker, gained 3.8 percent to 3,010 yen today, Honda jumped 4 percent to 2,944 yen and Mazda Motor Corp. soared 6.4 percent to 201 yen, the largest increase in the Nikkei 225. Carmakers rose the most among the Topix’s 33 industry groups.
The yen plunged to 85.14 per dollar this afternoon from a 15-year high of 82.88 this morning, after the government acted in the market for the first time since 2004. The yen is headed for its strongest annual average level since currencies began trading freely in 1971, according to data compiled by Bloomberg and based on each day’s close.
Against the euro, the Japanese currency weakened to 110.43 today in Tokyo from 107.58 at yesterday’s close of stock trading.
The yen appreciated beyond 83 per dollar last night for the first time since 1995 after the Democratic Party of Japan voted to confirm Kan as its leader following a challenge by Ichiro Ozawa, who had specifically called for intervention.
Pressure to Intervene
“Kan winning the premiership was a vote of confidence that enabled him to intervene on the yen,” said Ayako Sera, who helps oversee about $310 billion in Tokyo as a strategist at Sumitomo Trust & Banking Co. “If the yen continues its reversal, it will put one of the biggest concerns for Japan behind us and we should see increased buying of exporters.”
Kan was under increasing pressure to intervene after calls by business leaders for stronger steps to arrest the yen’s gains, which erode the competitiveness of the exports that have propelled Japan’s economic growth.
Every 1-yen increase by Japan’s currency versus the dollar cuts Toyota’s annual operating profit by 30 billion yen ($353 million) and by 16 billion yen at Honda, the companies have said.
The number of Topix-listed shares traded was the highest since July 22. Electronics makers contributed the most to the index’s advance, followed by carmakers.
Canon, a camera maker that gets more than 80 percent of its sales overseas, rose 1.9 percent to 3,835 yen, reversing a drop this morning, even after JPMorgan Chase & Co. cut its investment rating on the company.
Sony Corp., an electronics maker that earns about 70 percent of sales abroad, gained 4.1 percent to 2,596 yen. Fanuc Ltd., a maker of industrial robots, advanced 3.3 percent to 10,060 yen and was the biggest boost to the Nikkei 225.
To contact the reporters for this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo skawano1@bloomberg.net.
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