Topix Rise to Highest Since July 2008 Before BOJ Decision

Japan’s Topix Index (TPX) extended a 4 1/2-year high, as Sojitz Corp. jumped and Sony Corp. (6758) rose to its highest in more than two years. Shares held gains after the Bank of Japan upgraded its economic assessment while keeping policy unchanged.

Sojitz Corp. surged 13 percent after the Nikkei newspaper said the trading company’s pretax profit will probably rise 30 percent next fiscal year. Sony advanced 5.9 percent after reports the electronic maker’s board may discuss spinning off its entertainment unit. ANA Holdings Inc. led airlines higher on a report Tokyo’s Haneda airport will complete a runway expansion early. Tokyo Electric Power Co. slumped after surging 59 percent in the last four days.

The Topix rose 0.4 percent to 1,276.03 at the close of trading in Tokyo. About eight shares fell for every seven that rose. The Nikkei 225 Stock Average climbed 1.6 percent to 15,627.26, with volume 54 percent above its 30-day average.

“The momentum rally will continue,” said Masahiko Ejiri, a Tokyo-based fund manager for Mizuho Asset Management Co., which oversees about $45 billion. “Even some of the conservative pension funds are afraid they’ll underperform their peers so they’re shifting back into domestic equities.”

The Topix and Nikkei 225 have risen about 50 percent this year, outperforming all major equity indexes amid unprecedented BOJ easing. The Topix traded at 1.4 times book value, compared with about 2.5 for the Standard & Poor’s 500 Index and 1.7 for the Stoxx Europe 600 Index.

BOJ Upgrade

The BOJ upgraded its assessment of the economy today, while maintaining a plan to expand the monetary base by 60 to 70 trillion yen annually. The bank made no reference to the recent jump in Japanese government bond yields.

Sojitz was the second-best performer on the Nikkei 225, surging 13 percent to 224 yen, its biggest jump since October 2008. Profit before tax will probably reach 60 billion yen next fiscal year, 30 percent above its forecast for this year, the Nikkei reported, without citing anyone.

Mitsumi Electric Co. gained the most on the gauge, advancing 13 percent to 831 yen. Nomura Holdings Inc. raised its price target on the stock after the partsmaker this month forecast a return to profit. Shares have risen almost 50 percent in May.

Sony provided the biggest boost to the Topix today, advancing 5.9 percent to 2,290 yen. The company’s board will evaluate a proposal by activist shareholder Daniel Loeb to take part of its entertainment business public, according to a person familiar with the matter.

More Runways

Airlines rose the most among the Topix’s 33 industry groups today after the Nikkei reported Tokyo’s Haneda airport may finish a runway expansion early, allowing for an increase in flights.

ANA, Japan’s second-biggest airline by market value, led the gains, rising gained 6.3 percent to 237 yen. Japan Airlines Co., the biggest, climbed 4.6 percent to 5,260 yen.

Tokyo Electric fell 9.6 percent to 737 yen. Shares surged 296 percent this year through yesterday, the most among the 2,428 securities in the MSCI All-Country World Index, even as the utility said it won’t pay a dividend and may face $107 billion in clean-up costs after the Fukushima disaster.

A gauge of Topix utility shares has almost doubled since mid-November when it became clear the Liberal Democratic Party, a longtime advocate of nuclear energy, would regain power.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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