Japanese Stocks Rise for First Time in Five Weeks as Weaker Yen Expected

Japanese stocks snapped a four-week losing streak as investors bet the yen will weaken from near record highs amid speculation U.S. Federal Reserve Chairman Ben S. Bernanke won’t unveil new measures to prop up the world’s largest economy in a speech today

The Nikkei 225 (NKY) rose 0.3 percent to 8,797.78 at the 3 p.m. close after swinging between gains and losses more than 10 times. For the week, the Nikkei advanced 0.9 percent. The yen slipped 0.6 percent against the dollar, boosting the earnings outlook for exporters.

“Everyone is paying attention to what Bernanke will say, and they expect nothing,” saidMitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “If Bernanke says nothing, the yen will weaken and that’s the best outcome for Japan.”

Treasuries headed for their steepest weekly loss in almost two months on speculation the U.S. economy is growing enough to keep Bernankefrom announcing a third round of bond purchases today when he speaks at an annual conference in Jackson Hole, Wyoming. Bernanke used his speech last year to announce the Fed would “do all that it can” to spur growth. He went on to implement a $600 billion debt-purchase plan in November.

The broader Topix gained 0.6 percent to 756.07 today, advancing 0.6 percent for the week. Stocks also inched up after Japanese Prime Minister Naoto Kan, whose popularity had plunged below 20 percent, said he’s resigning.

‘The Next Leader’?

“Investors aren’t paying too much attention to politics,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “There aren’t strong expectations for the next leader.”

The Topix has lost about 10 percent this month amid concern U.S. growth is slowing and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 88 percent of book value, the lowest since March 2009.

Trading volume was below average ahead of the Jackson Hole meeting, the focal point of investor concern for the week. The value of shares traded today on the first section of the Tokyo Stock Exchange was 1.13 trillion yen ($14.7 billion), about 20 percent less than this year’s daily average of 1.4 trillion yen.

‘Holding Pattern’

“Nobody knows what the actual outcome will be and everything is speculation at this point, so it’s difficult for investors to take a clear position,” said Hitoshi Asaoka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “Investors are in a holding pattern.”

Exporters gained late in the day as speculation mounted Bernanke would announce nothing. Sony Corp., an exporter of consumer electronics that has seen profit squeezed by the yen’s rise to a postwar high, rose 0.7 percent. Mazda Motor Corp., which gets about a quarter of its sales in North America, advanced 1.3 percent to 162 yen.

Bernanke triggered a 28 percent rally in the Standard & Poor’s 500 Index last year at the same conference when he signaled the Fed would buy more bonds to prop up the economy. That policy -- known as quantitative easing -- was a mix- blessing for Japanese exporters because, while it boosted asset prices, it also undermined the dollar.

Failed Intervention

The U.S. currency has weakened about 9 percent against the yen since Aug. 26, 2010 when Bernanke hinted he would flood the economy with liquidity. Three rounds of yen sales by the Japanese government in the last year have failed to stem the currency’s rise.

Among stocks that moved today, Elpida Memory Inc. (6665), a maker of semiconductors that has lost more than 40 percent of its value this year, surged 18 percent to 535 yen.

The rally may have been triggered by a rise in the price of dynamic-random-access-memory chips used to help personal computers juggle multiple programs, said Tsuyoshi Segawa, a strategist at Mizuho Securities Co. in Tokyo. The spot price of some DRAM chips rose 3.2 percent yesterday, the first gain in almost five months, according to Taiwan-based Dramexchange.

Kyowa Hakko Kirin, the drugmaker majority owned by Kirin Holdings Co., climbed 3.8 percent to 789 yen after the company said it plans to buy back as much as 4.39 percent of its outstanding shares, according to a statement.

AOC Holdings Inc. (5017) lost 2 percent to 434 yen. Mitsubishi UFJ Morgan Stanley Securities Co. cut its investment rating on the oil explorer to “neutral” from “outperform,” citing a delay in starting production at a field in the North Sea. The brokerage also lowered the stock’s price target to 480 yen from 680 yen.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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