Topix Rises to 4 1/2-Year High on BOJ, China Factory Data

Japanese shares rose, with the Topix Index (TPX) closing at a 4 1/2-year high, on expectations the Bank of Japan (8301)’s new governor will announce more easing today and after data showed Chinese manufacturing accelerated.

Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, increased 1.8 percent. Fanuc Corp., which supplies robotics for Chinese factories, surged 5.1 percent. Kansai Electric Power Co. rose 5.5 percent after Kyodo News said reactors at the utility’s Ohi atomic plant may pass new safety standards. Toray Industries Inc. jumped 6.4 percent after the world’s largest maker of carbon fibers said it plans to double sales in Thailand.

The Topix increased 1.2 percent to 1,058.10 in Tokyo, its highest close since October 2008. All but three of its 33 industry groups rose. The Nikkei 225 Stock Average gained 1.3 percent to 12,635.69. Volume on the gauge was 24 percent lower than its 30-day average. The market was closed yesterday for a holiday.

“If the Bank of Japan says it will bring forward its asset-purchase program, that will have a big impact on the market,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about 498 billion yen ($5.2 billion). “If they say anything more about easing than they have in the past, it’s going to be good for stocks.”

The Topix rallied 46 percent from Nov. 14, when elections were announced that brought Prime Minister Shinzo Abe to power on a platform of increased stimulus and monetary easing from the central bank. The gauge is trading at 1.2 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Easing Expectations

Haruhiko Kuroda, who succeeded Masaaki Shirakawa as central bank governor yesterday, may call for “bold easing” at his first press conference at 6 p.m. Tokyo time, the Nikkei newspaper reported without citing anyone.

Shares rose even after Japan posted its longest run of trade deficits in three decades as exports fell more than forecast in February. Shipments dropped 2.9 percent from a year earlier, according to the Finance Ministry, while imports rose 11.9 percent, leaving a trade deficit of 777.5 billion yen, an eighth consecutive month of shortfall.

Real estate stocks led declines on the Topix today after the sector’s rating was cut at Morgan Stanley. Mitsubishi Estate Co., Japan’s biggest developer by market value, slumped 2.7 percent to 2,587 yen. Mitsui Fudosan Co., Japan’s largest property company by sales, slipped 1.5 percent to 2,605 yen.

Bernanke Comments

Futures on the S&P 500 fell 0.1 percent today. The gauge yesterday snapped a three-day decline after Fed Chairman Ben S. Bernanke said further gains in the U.S. labor market are needed to consider reducing record monetary easing. Fed officials forecast the nation’s unemployment rate will fall to the central bank’s threshold for raising interest rates in 2015.

Exporters gained, with Sony adding 1.8 percent to 1,690 yen. Nissan Motor Co. (7201), a carmaker that gets 32 percent of its revenue in North America, rose 1.9 percent to 975 yen.

China-related shares rose after a preliminary reading of a Purchasing Managers’ Index was 51.7 in March, according to HSBC Holdings Plc and Markit Economics. The pace of manufacturing expansion in China beat the median estimate of 50.8 in a Bloomberg News survey of 11 analysts. Last month’s reading was 50.4.

Fanuc jumped 5.1 percent to 15,360 yen. Hitachi Construction Machinery Co. (6305), a machinery maker that gets 17 percent of its revenue in China, gained 1.1 percent 2,089 yen.

Kansai Electric gained 5.5 percent to 800 yen. The government may give a five-year grace period for Japanese utilities to fulfill some new nuclear safety requirements, including construction of cooling facilities and secondary control rooms, Kyodo reported without attribution.

Nippon Sheet

Nippon Sheet Glass Co., which gets 41 percent of its sales from Europe, gained 3.7 percent to 112 yen. President Nicos Anastasiades of Cyprus met advisers to draft a new plan to stave off financial collapse. The government’s alternative plan may include a new version of the deposit tax proposed by euro-zone finance chiefs that was rejected by lawmakers, according to an official who spoke after a meeting of the Cabinet.

Toray Industries jumped 6.4 percent to 651 yen, its biggest gain in two years. The fiber maker plans to invest 56 billion yen in Thailand by 2020 as it double sales there, according to a Nikkei report.

The Nikkei Stock Average Volatility Index (VNKY) was unchanged at 24.14 today, indicating traders expect a swing of about 6.9 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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