Japan Stock Futures Rise With Topix Poised to Rebound From Slump

Japanese stock futures rose, indicating the market may rebound from yesterday’s rout that erased $314 billion in market value during the biggest drop in the country’s shares since the 2011 earthquake.

American Depositary Receipts of Honda Motor Co. advanced 1.8 percent from the close in Tokyo after yesterday’s 5.2 percent drop. ADRs of Canon Inc. (7751), a camera maker, added 1.7 percent after a 3.9 percent loss. Shares of SoftBank Corp. (9984), Japan’s third-largest wireless carrier, may be active after saying it will let the U.S. government have veto power over one nominee to Sprint Nextel Corp.’s board to ease security concerns if its $20.1 billion takeover bid succeeds.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring next month traded at 14,800 at the close in Chicago yesterday, up from 14,590 at the close in Osaka, Japan. They were bid in the pre-market at 14,730 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index advanced 0.3 percent and New Zealand’s NZX 50 Index rose 0.2 percent.

“While no small matter, Thursday’s stomach-turning correction in Japan and Asia ultimately strikes us mostly as a mere step-back on a continuing upward path for Japanese and Asia-Pacific equities,” said Michael Kurtz, Hong Kong-based head of global equity strategy at Nomura Holdings Inc., Japan’s largest brokerage. There has been no “fundamental impairment of Japan’s medium-term growth and equity-return prospects.”

Hong Kong

Futures on Hong Kong’s Hang Seng Index and contracts on the Hang Seng China Enterprises Index of mainland companies trading in Hong Kong both retreated 0.2 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 1.3 percent in New York yesterday.

Japan’s Nikkei 225 plunged 7.3 percent yesterday and the Topix Index slumped 6.9 percent, their biggest daily drops since March 15, 2011, in the immediate aftermath of Japan’s earthquake and tsunami. Financial companies led the decline as every stock in the Nikkei 225 retreated for the first since April 2005.

Both gauges were up almost 40 percent this year through yesterday as the Bank of Japan stepped up efforts to end deflation. Gains for the Topix remain more than twice as big as in the Standard & Poor’s 500 Index this year even after the drop.

The Chicago Mercantile Exchange Inc. is raising the margin requirements for speculators in Japanese stock futures after prices fell the most in two years. The initial margin for Nikkei 225 Stock Average futures will rise 33 percent to $3,300 per contract at the close of trading today, Chicago-based CME Group Inc. said in a statement. Initial margin is the minimum amount of cash or eligible securities investors must deposit to cover the risk of default.

Relative Value

The MSCI Asia Pacific Index, the benchmark regional equities gauge, has gained 7.2 percent this year through yesterday, leaving the measure trading at 13.7 times average estimated earnings compared with 15 for the Standard & Poor’s 500 Index and 13.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index (SPX) rose 0.1 percent. The gauge yesterday fell 0.3 percent, giving the index its first back-to-back drop in one month, as a contraction in China manufacturing offset American housing data and investors weighed Federal Reserve stimulus comments.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.