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Exporters Lift Nikkei 225 to 8-Month High as Yen Weakens

Japanese equities rose, with the Nikkei 225 (NKY) Stock Average extending an eight-month high, led by exporters after the yen touched its weakest level since March.

Toyota Motor Corp. climbed 1.1 percent. Panasonic Corp. (6752) gained 7.9 percent after its investment rating was raised by Barclays Plc. Sharp Corp. jumped 6.4 percent after the Wall Street Journal reported the company may design televisions for Apple Inc. Tokuyama Corp., which makes materials for solar cells, increased 8.2 percent after reports the Chinese government is increasing subsidies for the industry.

The Nikkei 225 gained 1.7 percent to 9,742.73 at the 3 p.m. in Tokyo, gaining the most in nearly four weeks and closing at its highest since April 5. The measure has gained 12 percent since Nov. 14, when the government called for elections on Dec. 16. Stocks climbed as the yen weakened on bets Shinzo Abe’s opposition Liberal Democratic Party will win and call for more monetary easing.

“People are now pretty excited with the Japanese election coming up this weekend,” said Grace Tam, Hong Kong-based global market strategist at JPMorgan Asset Management Ltd., which oversees about $1.3 trillion globally. “Investors have a high expectation that if Abe wins the elections, they’ll do more aggressive monetary easing and people expect the yen to weaken. In the short term, exporters should see a good rebound.”

The broader Topix Index rose 1 percent to 799.21 today, with about two stocks rising for each that fell. The gauge is headed for a gain of more than 9 percent this year, its best annual performance since 2005, when the measure jumped 44 percent.

Relative Value

The measure trades at 0.95 times book value, compared with 2.16 for the Standard & Poor’s 500 Index and 1.55 for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.

Makers of cars and electronics advanced even ahead of a Bank of Japan survey tomorrow expected to show the nation’s biggest manufacturers are the most pessimistic since the first quarter of 2010. Sentiment slid to minus 10 from minus 3 in the third quarter, the BOJ’s quarterly Tankan report will show, according to the median estimate of economists in a Bloomberg News survey.

The yen touched its weakest level against the dollar since March. Japan’s currency has fallen almost 4 percent against the greenback in the past month as the LDP, which is leading in opinion polls ahead of this weekend’s elections, called for a doubling of the central bank’s inflation goal to 2 percent and “unlimited” monetary easing.

‘Big Move’

“There’s been a big move in the currency,” said Stan Shamu, Melbourne-based strategist at IG Markets Ltd., a provider of trading services. “That’s the big positive for the Nikkei today and the exporters will be the ones that benefit.”

Toyota increased 1.1 percent to 3,600 yen. Honda Motor Co. (7267), which counts North America as its biggest market for sales, rose 2.7 percent to 2,824 yen. Canon Inc., the world’s biggest camera maker by market value, gained 2.1 percent to 3,140 yen.

Futures on the S&P 500 increased 0.1 percent today. The gauge gained less than 0.1 percent yesterday as optimism about Federal Reserve plans to buy more bonds faded, with investor focus returning to U.S. budget talks deadlocked in Washington.

The Fed for the first time linked the outlook for its main interest rate to unemployment and inflation and said it will expand its asset purchase program by buying $45 billion a month of Treasury securities starting in January to spur the economy.

Panasonic Advances

Panasonic jumped 7.9 percent to 481 yen, the most since July 2009 and the second-biggest advance on the Nikkei 225. (NKY) The shares were raised to overweight from equal-weight by Barclays, which boosted its share-price target to 540 yen from 430 yen. The electronics maker may also delay plans for a plant in Europe, the Mainichi newspaper reported, citing Senior Managing Director Kazunori Takami.

Sharp leapt 6.4 percent to 250 yen. The display maker and Taiwan’s Hon Hai Precision Industry Co. are collaborating to design a television for Apple Inc., the Wall Street Journal reported.

Tokuyama, which makes polycrystalline silicone for solar batteries, jumped 8.2 percent to 159 yen, the biggest gain on the Nikkei 225. Three separate reports, including from China’s Xinhua News Agency, reported that the Chinese government is adding financial support for the solar industry.

The Nikkei Stock Average Volatility Index (VNKY) rose 10 percent to 19.20 today, indicating traders expect a swing of about 5.5 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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