Topix Swings Between Gains, Losses on Easing Bets, Yen

Most Japanese stocks fell, with the Topix Index halting a three-day rally, as the yen rose against the majority of its counterparts and paper companies dropped.

Papermakers led declines among the Topix’s 33 industry group after Nippon Paper Group Inc. (3893) said it will raise prices. Mazda Motor Corp. (7261), an automaker that gets 72 percent of its sales outside Japan, slid 1.8 percent after gaining as much as 0.7 percent. Fast Retailing Co. (9983), Asia’s largest clothier, added 5.5 percent after same-store sales rose at its Uniqlo outlets in Japan. Taiyo Yuden Co. had the biggest gain on the Nikkei 225 Stock Average (NKY) after the ceramic-capacitor maker was raised to buy at Jefferies.

The Topix fell 0.4 percent to close at 988.62 in Tokyo after rising as much as 0.8 percent. The Nikkei 225 gained 0.3 percent to 11,683.45, paring gains of as much as 1.1 percent. Shares rose earlier on speculation central banks in the U.S. and Japan will maintain easing to stimulate growth.

“The market is pausing after rising quite a bit and the Topix seems to be facing resistance around 1,000,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co., a unit of Japan’s third-biggest lender by market value. “The market has priced in Bank of Japan personnel changes and the focus is switching to what the central bank will actually do.”

The Topix surged 37 percent from Nov. 14 on optimism a new government will push for bold policy to beat deflation, with Prime Minister Shinzo Abe nominating easing proponent Haruhiko Kuroda to lead the central bank. The measure is trading at 1.2 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Iwata Comment

The BOJ should buy longer-term bonds to help it achieve a 2 percent inflation target, Kikuo Iwata, one of the nominees for central bank deputy governor, told parliament today. BOJ Executive Director Hiroshi Nakaso, nominee for the second deputy governor position, said the central bank may have more room to be creative in monetary policy. Kuroda yesterday vowed to do whatever necessary to end deflation should he be named to replace Governor Maasaki Shirakawa when he retires March 19.

Jim Rogers, who co-founded the Quantum Fund with George Soros in the 1970s, said he boosted his holdings of Japanese shares and plans to buy more because Abe will boost the economy. Rogers spoke at a Daiwa Securities Group Inc. equity conference in Tokyo today.

Exporters reversed gains as the yen advanced against 14 of its 16 major counterparts. A stronger yen cuts the value of overseas earnings at Japanese exporters when repatriated. Mazda lost 1.8 percent to 273 yen. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, declined 0.9 percent to 1,425 yen after advancing as much as 1.9 percent.

Oji Slumps

Paper companies declined as Nippon Paper said in a statement it will raise prices with April 21 shipments. Nippon Paper, which has gained the most of any member in the Topix Paper & Pulp Index this year, dropped 5.1 percent to 1,634 yen. Oji Holdings Corp., the biggest Japanese paper company by market value, slumped 8.3 percent to 331 yen.

Futures on the S&P 500 Index were little changed today. The U.S. equity gauge 0.5 percent yesterday, when Federal Reserve Vice Chairman Janet Yellen said the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible risks from the unprecedented program.

China maintained its economic-growth target at 7.5 percent for 2013 while setting an inflation goal of 3.5 percent, according to Premier Wen Jiabao’s work report released in Beijing ahead of the annual meeting of the National People’s Congress today. The growth projection missed a median estimate for an 8.1 percent expansion.

Fast Retailing

Among stocks that rose, Fast Retailing jumped 5.5 percent to 26,770 yen, the biggest advance since April, after same-store sales at its Uniqlo Japan outlets rose 9.6 percent in February from a year earlier. Bank of America Merrill Lynch raised the share’s price target to 30,000 yen from 28,000 yen.

Taiyo Yuden soared 9.1 percent to 1,149 yen as its rating was raised to buy from hold and the price target was lifted to 1,350 yen from 700 yen by Jefferies analyst Masahiro Wakasugi, citing increased market share in some product categories.

The Nikkei Stock Average Volatility Index (VNKY) fell 4.4 percent to 25.94, indicating traders expect a swing of about 7.4 percent on the benchmark gauge over the next 30 days. Volume on the Nikkei 225 was 22 percent below the 30-day average.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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