Japanese stocks rose the most in three weeks after Greek Prime Minister George Papandreou won a parliamentary confidence vote that moved the country one step further from default.
Sony Corp. (6758), which gets more than 20 percent of its sales in Europe, climbed 3.7 percent. Toyota Motor Corp. (7203) gained 1.1 percent after Deutsche Bank AG. raised its profit estimate for the world’s biggest carmaker. Oji Paper Co. jumped 3.5 percent after Daiwa Securities Capital Markets Co. raised its rating on Japan’s largest papermaker to “outperform,” citing improving profits at the company’s cardboard business.
The Nikkei 225 Stock Average rose 1.8 percent to 9,629.43 at the 3 p.m. close in Tokyo. The broader Topix index gained 1.6 percent to 828.99, the gauge’s biggest advance since May 31. More than ten stocks climbed for each that dropped.
In Athens early today, Papandreou won a vote of confidence in Greece’s 300-member parliament, with all 155 lawmakers in the Socialist Party expressing their support for the prime minister’s government. The vote averted a leadership crisis that would have made it more difficult to pass austerity measures that Europe is demanding in return for bailout money.
Attention now turns to whether Papandreou can push through parliamentary approval next week of a 78 billion-euro ($112 billion) package of budget cuts. European finance ministers said this week they would hold off on approving a 12 billion- euro payment to the country until passage of plans to cut the deficit, sell state assets and impose a “crisis levy” on wages.
Sony rose 3.7 percent to 2,012 yen. Seiko Epson Corp. (6724), a maker of printers and watches which makes more than 20 percent of its sales in Europe, climbed 3 percent to 1,349 yen.
The Topix has lost 7.8 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, triggering the worst nuclear accident in 25 years, disrupting supply chains, and leaving more than 23,000 people dead or missing. The decline was the biggest among the world’s 40-largest benchmark indexes.
The slump has pushed valuations on the Topix index to 1.21 times book value, compared with 2.18 on the Standard & Poor’s 500 Index and 1.56 on the Stoxx Europe 600 Index. About two thirds of the 1,671 Topix companies trade at less than book value, meaning that investors could theoretically buy the firms at current prices and liquidate them at a profit.
“Japanese stocks are trading at very discounted levels,” said Junichi Misawa, head of equity investment at Tokyo-based STB Asset Management Co., which oversees about $17 billion. “The economy will get a boost in the second-half of the year as production recovers and companies rebuild inventories. That should support stock prices.”
Bank of Japan Governor Masaaki Shirakawa said on June 1 supply constraints are easing faster than expected as companies rush to repair factories. While gross domestic product shrank at an annualized 3.5 percent rate in the three months ended March 31, economists predict the economy will expand in the second half of the year as reconstruction work kicks in.
Toyota gained 1.1 percent to 3,240 yen afer Deutsche Bank analyst Kurt Sanger raised his estimate for Toyota’s operating profit in the year ending in March 2012 to 500 billion yen ($6.2 billion) from 461 billion yen. Sanger said the carmaker, which forecasts operating profit of 300 billion yen, was being “conservative” in its predictions for car sales, warranty provisioning rates and material prices.
Jtekt Corp. (6473), a supplier of parts to Toyota, advanced 3.2 percent to 1,189 yen. The company, which had delayed earnings forecasts because of damage from March’s earthquake, said net income will rise 20 percent to 24 billion yen in the year ending in March 2012.
Makers of cardboard and other pulp products advanced the most among the Topix’s 33 industry groups after Oji Paper had its rating increased to “outperform” from “neutral” at Daiwa Securities. Oji Paper rose 3.5 percent to 382 yen. Closet rival Nippon Paper Group Inc. (3893) climbed 3 percent to 1,735 yen.
Among stocks that fell, Seven & I Holdings Co., operator of Ito-Yokada Co. supermarkets, dropped after the Japan Chain Store Association said Japan’s supermarket sales fell 1.4 percent last month, following a 1.3 percent decline in April. Seven & I lost 0.8 percent to 2,175 yen.
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