Nikkei 225 Rises Second Week as Defensive Shares Advance

Japanese shares rose, pushing the Nikkei 225 Stock Average to a second week of advances, as domestically-oriented shares including food and services climbed. Exporters and banks slid on concern they have risen too far, too fast.

Secom Co., a which provides security services, gained 3 percent. Kirin Holdings Co. advanced 4 percent to its highest since 2010. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, lost 1.4 percent. Sony Corp. lost 2.4 percent after Fitch Ratings said its PlayStation 4 is unlikely to generate enough cash flow to turn the company’s credit profile around.

The Nikkei 225 rose 0.7 percent to 11,385.94 at the close in Tokyo, advancing 1.9 percent on the week. The broader Topix Index climbed less than 0.1 percent to 963.48.

“Some domestic stocks are rebounding because they had fallen behind the broader market rally,” said Shintaro Takeuchi, portfolio investment group manager at Tokio Marine & Nichido Fire Insurance Co., which manages 8.67 trillion yen ($92.9 billion) in assets. “Investors are taking profit on other stocks like exporters and banks after their big gains.”

The Topix has surged 32 percent since Nov. 14, when national elections were announced, amid optimism Prime Minister Shinzo Abe and the central bank will lead the country out of deflation. The measure is trading at 1.1 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Futures on the S&P 500 rose 0.3 percent today. The gauge declined 0.6 percent in New York yesterday, following the biggest drop since November, as concern grew that the U.S. Federal Reserve may slow the pace of stimulus. James Bullard, president of the bank’s St. Louis branch, said falling U.S. unemployment next year may prompt the Fed to raise its key rate.

Market Correction

“The markets were too euphoric about the economic recovery overseas, so we’re now facing some correction,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($353 billion) in assets. “Investors are using this as an opportunity to take profits.”

The Topix’s banking group, which has jumped 16 percent this year compared with the broader Topix’s 12 percent advance, lost 0.6 percent today. Mitsubishi UFJ Financial Group, which has risen about 11 percent this year, fell 1.4 percent to 513 yen. Sumitomo Mitsui Financial Group Inc. slid 0.7 percent to 3,695 yen, paring this year’s gains to 19 percent.

Exporters also declined. Toyota Motor Corp. (7203), the world’s top automaker, lost 0.7 percent to 4,730 yen. Panasonic Corp., a maker of home electronics, declined 0.3 percent to 671 yen.

Paper makers, service providers and food companies rose the most among the Topix’s 33 industry groups today. Secom rose 3 percent to 4,740 yen, reversing yesterday’s decline. Paper-maker Oji Holdings Corp. gained 2.8 percent, paring yesterday’s 3.5 percent loss. Kirin Holdings, a beverage maker, jumped 4 percent to 1,313 yen.

The Nikkei Stock Average Volatility Index gained 1.4 percent to 27.44 indicating traders expect a swing of about 7.9 percent of 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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