Japan Topix Records Best Month Since 1999 on Earnings

Japan’s Topix Index (TPX) rose, capping its best month in 14 years, as brokerages led the advance after Nomura Holdings Inc. (8604)’s quarterly profit more-than-tripled to the highest in seven years.

Nomura, the nation’s largest brokerage, climbed 4.1 percent as brokerage commissions and investment banking fees jumped. Mitsui O.S.K. Lines Ltd. (9104), Japan’s second biggest shipping line by revenue, gained 3.9 percent after saying it will return to profit this fiscal year. Robot maker Fanuc Corp. plunged 5.6 percent after saying operating profit fell, contributing the most to the decline in the Nikkei 225 Stock Average.

The Topix gained 0.3 percent to close at 1,165.13 in Tokyo, with about five stocks rising for every three that fell. It gained 13 percent this month, the best monthly rally since March 1999. The Nikkei 225 fell 0.2 percent to 13,860.86.

“We can expect some profit growth in domestic shares tied to government stimulus measures, if not as much as in exporters,” said Masaru Hamasaki, a senior strategist at Tokyo- based Sumitomo Mitsui Asset Management Co., which manages about 10.2 trillion yen ($104 billion) in assets. “We may see a correction in Japanese stocks any time, and I don’t think the stocks are cheap in terms of valuation.”

Japanese markets were closed yesterday for a public holiday. The Topix advanced 61 percent from mid-November as Prime Minister Shinzo Abe and central bank Governor Haruhiko Kuroda pledged to defeat 15 years of deflation.

The gauge traded at 17.4 times estimated earnings, compared with 14.4 for the Standard & Poor’s 500 Index and 12.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Of the 251 companies on the 1,711-member Topix that have reported annual earnings since April 1, and for which Bloomberg has estimates, 146 have beat projections.

Nomura Earnings

Nomura advanced 4.1 percent to 793 yen, leading gains among brokerages. Net income rose to 82.4 billion yen ($840 million) for the three months ended March 31, from 22.1 billion yen a year earlier, Nomura said on April 26. The result exceeded the 56 billion yen average estimate of nine analysts.

SBI Holdings Inc., the best performing stock on the MSCI Asia Pacific Index this year, surged 16 percent to 1,886 yen, rising the most on the Topix Securities Index. Daiwa Securities Group Inc. (8601),the second largest brokerage, rose 5 percent to 863 yen.

Mitsui O.S.K. added 3.9 percent to 405 yen after forecasting a net profit of 50 billion yen this fiscal year as a weaker yen boosts earnings from dollar-based contracts. The Japanese currency has plunged 19 percent over the past six months, the worst performance among the 10 developed-market currencies tracked by the Bloomberg Correlation Weighted Indexes.

Fanuc Plunges

Fanuc plunged 5.6 percent to 14,700 yen, the biggest retreat since Jan. 28, after reporting a 17 percent drop in operating profit in the year ended March and forecasting declines in first-half sales and profits.

Fanuc is the second heaviest weighted stock in the Nikkei 225. (NKY) The benchmark gauge is being influenced more than at any time in the last 12 years by the movements of a single company, clothier Fast Retailing, which makes up about 10 percent of the gauge.

Honda Motor Co. (7267), Japan’s second largest carmaker by market value, fell 3.4 percent to 3,875 yen. Net income will probably rise 58 percent to 580 billion yen in the 12 months ending March 2014, Honda said April 26. Though the profit forecast missed the average analyst estimate compiled by Bloomberg, Honda’s revenue projection exceeded estimates.

Ricoh, a maker of office automation equipment, slumped 8.4 percent to 1,086 yen after posting net income of 32.5 billion yen for the year ended March below its own estimate. The stock fell the most since March 2011.

The Nikkei Stock Average Volatility Index slid 1.3 percent to 25.25, indicating traders expect a swing of about 7.2 percent on the benchmark gauge over the next 30 days. Trading volume on the Nikkei was about 9 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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