Japanese stocks rose for the first time in five days on speculation a selloff that drove valuations to a 28-month low was excessive even as the country battles to prevent a nuclear disaster after its strongest earthquake.
Toyota Motor Corp., the world’s largest carmaker, surged 9.1 percent. Sony Corp., Japan’s biggest exporter of consumer electronics, jumped 8.8 percent. Mizuho Financial Group Inc., Japan’s No. 3 bank, surged 5.4 percent. Tokyo Electric Power Co., Asia’s biggest power generator, tumbled by the daily limit for a third day after the company said today a new fire broke out at a reactor following an earthquake on March 11.
The Nikkei 225 Stock Average rose 5.7 percent to 9,093.72 at the 3 p.m. market close in Tokyo, the biggest gain since November 2008. The gauge plunged 11 percent yesterday as record trading volume on the main section of the Tokyo Stock Exchange drove the average price of shares in the Nikkei to 14.7 times estimated profit, the lowest level since November 2008.
“People sold anything and everything in a panic and now they’re buying back stocks which declined a lot,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees $84 billion. “If we see the nuclear issues being overcome, or if we see a possibility that radiation leaks can be controlled, shares should rise even further. The global economy is not so bad, so if reconstruction in Japan advances, stocks should recover slowly. It will take time to factor in the bad news.”
The broader Topix index climbed 6.6 percent to 817.63 today, with all of its 33 industry groups advancing. The index gained the most since October 2008.
Futures on the Standard & Poor’s 500 Index climbed 0.2 percent today. The index declined 1.1 percent yesterday in New York, rebounding from a 2.7 percent slump earlier, as Japanese officials made progress in stabilizing nuclear reactors damaged following last week’s earthquake, and after the Federal Reserve said the American economy is improving.
Investors and traders should “respond in a calm and orderly manner” exchange President Atsushi Saito said yesterday, after the Nikkei 225 (NKY) Stock Average plunged 11 percent, bringing its loss since March 11’s close to 16 percent. The Nikkei and broader Topix index each fell as much as 14 percent, the biggest intraday retreats since the October 1987 stock market crash.
The total value of stocks traded on in Japan reached 3.29 trillion yen ($40.7 billion), the highest since June 2008.
The number of stocks whose price-to-book ratio was lower than 1 totaled 1,198 as of yesterday, more than 70 percent of the Topix index members, according to Nikko Cordial Securities.
“Japanese stocks are at a relatively cheap level,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “The U.S. economy is recovering and the economies of China and other emerging countries aren’t deteriorating.”
The Nikkei Volatility Index, derived from prices traders were paying for options to insure against losses in stocks had its biggest two-day jump on record through yesterday, according to data compiled by Bloomberg.
“Equity valuations are far more attractive now than in 1995,” when Great Hanshin earthquake struck Kobe, Kathy Matsui who runs Goldman Sachs Group Inc.’s economics, commodities and strategy research division for Asia, and other analysts wrote in a report dated yesterday. “Since we expect the impacts to be temporary, our forecast of steady U.S. and global growth, dissipating domestic deflation, a profit expansion through FY2012, and reasonable valuations suggest that the market still has scope for upside over the medium-term.”
Profit of the companies listed on the Tokyo Stock Exchange’s first section will likely decrease by 10 percent in the year ending March 2012 because of the impact of the earthquake, according to an estimate by Goldman Sachs Group Inc.
Toyota surged 9.1 percent to 3,345 yen and was the biggest single support for the Topix. Nissan Motor Co., Japan’s third- biggest automaker by sales, rallied 6.2 percent to 741 yen. Bridgestone Corp., the world’s largest tiremaker, climbed 7 percent to 1,689 yen. Sony jumped 8.8 percent to 2,528 yen. Hitachi Ltd., which provides nuclear power generation systems, soared 17 percent to 422 yen, the most since at least September 1974.
Panasonic Corp., the world’s largest maker of plasma televisions, advanced 7.4 percent to 930 yen, the biggest gain since July 2009. The company plans to boost production of dry- cell batteries in Japan and may start importing the product from overseas factories to meet surging demand for disposable batteries after last week’s earthquake, said spokesman Akira Kadota.
Mizuho increased 5.4 percent to 137 yen. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, gained 4.4 percent to 381 yen.
Tokyo Electric Power plunged by the daily limit for a third day as sell orders outweighed those to buy by a factor of five to one. Asia’s biggest power generator said a fire broke out at the No. 4 reactor of the Fukushima Dai-Ichi nuclear power plant today. The fire, at the same installation as a blaze yesterday, was reported by a worker at about 5:45 a.m. local time today, a company spokesman said on public broadcaster NHK television. The company is gathering more information, the spokesman said.
The stock closed at 921 yen, down 25 percent from yesterday’s closing price. The company had lost 43 percent of its market value from the close on March 10 through yesterday.
The Tokyo Stock Exchange sets a limit on how much higher or lower a stock can be traded from the last closing price.
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