Japan Stocks Rise as Utilities, Shipping Lines Advance; Chubu Power Climbs
Japanese stocks rose for the first time in four days as investors bought utilities amid increasing uncertainty about the strength of the global economic recovery after reports signaled growth is slowing in the U.S. and Europe.
Electricity and gas suppliers had the biggest gain on the Topix index. Chubu Electric Power Co. increased 3.6 percent. Nippon Yusen K.K., the country’s largest shipping line by sales, jumped 3.4 percent after cargo rates increased yesterday and a SMBC Nikko Securities Inc. analyst maintained his bullish stance on Japan’s shipping line sector. Toshiba Corp. (6502), an electronics maker, increased 2.1 percent after the company said it will target operating profit of 500 billion yen ($6.1 billion) for fiscal 2013.
The Nikkei 225 Stock Average rose 0.2 percent to 9,477.17 at the 3 p.m. close of trading in Tokyo. The broader Topix index gained 0.2 percent to 819.16 with four stocks advancing for every three that fell.
“Because the state of affairs abroad is opaque, defensive stocks are rising as they are less risky,” said Yutaka Yoshii, a strategist at Tokyo-based Mito Securities Co.
The Topix has lost 12 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, crippling four of Tokyo Electric Power Co.’s nuclear reactors and disrupting supply chains at companies from Toyota Motor Corp. (7203) to chipmaker Renesas Electric Corp. Shares in the gauge traded at 0.98 times estimated book value, compared with 2.1 for the Standard & Poor’s 500 Index.
So-called defensive stocks including utilities, food producers and drugmakers, which are less affected by economic swings, advanced. Chubu Electric gained 3.6 percent to 1,270 yen. Tokyo Gas Co., a supplier of liquefied natural gas, advanced 2.4 percent to 344 yen. Japan Tobacco Inc. (2914), the world’s third- largest publicly traded maker of cigarettes, rose 1.6 percent to 314,000 yen. Astellas Pharma Inc. (4503), Japan’s second-biggest drugmaker, increased 0.7 percent to 3,065 yen.
The Federal Reserve Bank of Chicago’s gauge of U.S. economic activity unexpectedly dropped below zero in April. The national index, which draws on 85 economic indicators, was minus 0.45 in April versus 0.32 in March. A reading below zero indicates below-trend-growth in the national economy.
In Europe, services and manufacturing growth slowed more than economists forecast in May. Expansion in a composite index based on a survey of euro-area purchasing managers in both industries fell to a seven-month low, London-based Markit Economics said yesterday.
Belgium had the outlook on its AA+ credit rating lowered to negative from stable at Fitch Ratings, which cited concern over the pace of structural reform.
“People are worried that demand will weaken outside Japan as the economy slows, so it’s difficult to buy stocks of companies which rely on overseas demand, and that’s leading to gains in domestic stocks today,” said Yoshihiro Okumura, who helps manage the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo.
Shipping lines had the second-biggest gain after utilities on the Topix as the Baltic Dry Index, a measure of shipping costs for commodities, rose for a third day yesterday.
Nippon Yusen jumped 3.4 percent to 301 yen and Mitsui O.S.K. Lines Ltd., the second-largest shipper, increased 0.7 percent to 427 yen. Kawasaki Kisen Kaisha Ltd. (9107), the No. 3, advanced 1.2 percent to 265 yen.
SMBC Nikko Securities analyst Osuke Itazaki maintained his bullish stance on Japan’s shipping line sector, saying the share-price levels are low and that car transport and dry-bulk businesses should start improving.
Toshiba, Japan’s biggest maker of nuclear reactors, rallied 2.1 percent to 432 yen. The company said it plans capital spending of 1.45 trillion yen in the next three years on computer chips, hard disks and smart grids.
Sony Corp. (6758) climbed 2.7 percent to 2,270 yen after Nomura Holdings Inc. and Credit Suisse Group AG said profit at Japan’s No. 1 exporter of consumer electronics will likely beat what the company has forecast for this year.
Sony said operating income in the 12 months to March 2012 will be similar to the 200 billion yen ($2.5 billion) last fiscal year.
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