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Nikkei 225 Advances to Five-Month High on BOJ Stimulus

Japanese stocks rose, sending the Nikkei 225 Stock Average (NKY) to the highest close since May 2, after the Bank of Japan unexpectedly expanded its easing program to keep the rising yen from undermining a recovery, following stimulus measures from the U.S. Federal Reserve last week.

Ricoh Co., an office-equipment maker that gets more than 45 percent of its sales from the Americas and Europe, jumped 4.8 percent after the yen weakened. Japan Airlines Co. rose 1.1 percent after the carrier’s shares were relisted, with the stock accounting for as much as 33 percent of turnover on the Topix Index. Nissan Motor Co. rebounded after the carmaker said it will reopen factories shut amid violent protests in China.

The Nikkei 225 rose 1.2 percent to 9,232.21 at the 3 p.m. close in Tokyo, with volume 37 percent above the 30-day average. The broader Topix gained 0.9 percent to 764.80 after falling as much as 0.2 percent earlier. Almost three shares advanced for each that fell.

“The timing of the BOJ’s monetary easing was a surprise as we had expected it to act at the end of October,” said Masaru Hamasaki, Tokyo-based chief strategist at Toyota Asset Management Co., which manages the equivalent of $23 billion. “We’re seeing an increase in bank lending, so the additional liquidity from the BOJ will find its way into the real economy.”

The central bank increased its asset-purchase fund to 55 trillion yen ($697 billion) from 45 trillion yen, according to a statement released in Tokyo today. The Bank of Japan last expanded the fund on Feb. 14, driving the Nikkei 225 to another five-month high.

Five of 21 analysts surveyed by Bloomberg News predicted today’s BOJ easing while 11 expected action by October. The latest move follows the Fed’s announcement last week that it will buy $40 billion of mortgage-backed securities each month until the U.S. labor market recovers.

BOJ Action

“The BOJ seems to have gone above and beyond because stocks were firm and the yen didn’t strengthen much after the U.S. move last week,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 5 trillion yen ($64 billion). “It came out when the yen started shifting to a downtrend and stocks are playing catch-up. The BOJ’s action will bolster that trend and have a good impact because Japanese stocks are still low, unlike U.S. equities.”

The yen erased gains against the dollar and euro after the central bank decision. The Japanese currency fell as low as to 79.22 against the dollar, while losing as much as 0.8 percent to 103.63 per euro.

Ricoh jumped 4.8 percent to 716 yen. Kyocera Corp. (6971), an electronic-components maker that earns almost a third of its revenue in the U.S. and Europe, climbed 2.2 percent to 6,920 yen.

China Protests

Automakers have been among the hardest hit Japanese companies in China as violent protests there escalate, spurred by a territorial dispute over islands claimed by both nations. At risk is bilateral trade in goods ranging from rice to tractors that has tripled in the past decade to more than $340 billion.

Japan’s three biggest carmakers -- Toyota Motor Corp., Nissan and Honda Motor Co. -- have halted production at Chinese plants amid attacks on their dealerships in the eastern Chinese port city of Qingdao.

Nissan gained 3.7 percent to 727 yen after falling 5 percent yesterday. Shares rebounded after the carmaker said it will reopen two factories shut since Sept. 17. Toyota rose 1.9 percent to 3,255 yen, while Honda gained 2.7 percent to 2,674 yen.

Shipping lines gained the most among the Topix’s 33 industry groups. The Baltic Dry Index (BDIY), a measure of shipping costs for commodities, jumped 5.1 percent yesterday, its biggest gain since August 2011.

Nippon Yusen K.K., the nation’s biggest shipper, climbed 6 percent to 159 yen. Mitsui O.S.K. Lines Ltd. jumped 6.9 percent to 217 yen. Kawasaki Kisen Kaisha Ltd. soared 12 percent to 114 yen.

JAL Climbs

Japan Airlines rose 1.1 percent to 3,830 yen after its $8.4 billion IPO. The carrier was relisted following a trip through bankruptcy and a turnaround that shed more than a third of its workers, canceled routes and retired older planes.

Futures on the S&P 500 added 0.3 percent today. Most stocks on the gauge fell yesterday as delivery service FedEx Corp. slumped and concern grew that European leaders will struggle to resolve the region’s debt crisis.

-- with assistance from Yoshiaki Nohara in Tokyo. Editors: Jim Powell, Jason Clenfield

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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