Japan Stocks Rise First Day in Four on U.S. Stimulus Bets

Japanese stocks rose, with the Topix (TPX) index halting a three-day loss, as slower-than-expected U.S. economic growth increased speculation the Federal Reserve will maintain stimulus.

Honda Motor Co., a carmaker that gets 47 percent of revenue in North America, added 3.2 percent after its outlook was raised at Moody’s Investor Service. A gauge tracking developers soared 8.8 percent, leading gains as all 33 Topix groups rose. ReproCell Inc. (4978), a stem-cell research company, went untraded for a second day after debuting yesterday on the JASDAQ Stock Index, with bids to buy outnumbering offers to sell by 2-to-1.

The Topix climbed 2.8 percent to 1,098.83 at the close in Tokyo. Volume was 33 percent below the 30-day average. The Nikkei 225 Stock Average added 3 percent to 13,213.55, with only 14 companies falling.

“It’s quite interesting that bad data sometimes becomes good,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages more than $130 billion. “The market is worried that if short-term growth in particular shows strong signs, then maybe monetary stimulus will be removed quickly.”

The Topix has fallen 14 percent from an almost five-year high on May 22. The measure traded at 13.9 times average estimated earnings, compared with 14.5 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index.

Exporters Gain

Futures on the S&P 500 rose 0.3 percent. The gauge added 1 percent yesterday after data showed the economy expanded at a revised 1.8 percent rate in the first quarter, down from a prior estimate of 2.4 percent. The Federal Reserve won’t taper stimulus unless the economy improves in line with projections, Chairman Ben S. Bernanke said on June 19.

Exporters to the U.S. gained, with Honda adding 3.2 percent to 3,605 yen. Toyota Motor Corp. (7203), the world’s biggest carmaker, rose 3.5 percent to 5,900 yen after its outlook was also raised by Moody’s.

The Topix Real Estate Index surged 8.8 percent, the biggest jump since April 5. Mitsui Fudosan Co. (8801), Japan’s largest property company by sales, advanced 9.6 percent to 2,788 yen. Mitsubishi Estate Co. (8802), the No. 1 by market value, soared 9.4 percent to 2,476 yen.

The Topix pared this week’s loss to less than 0.1 percent as concerns eased about a cash crunch in China. The People’s Bank of China said June 25 it has provided liquidity to some financial institutions to stabilize money-market rates and will use other tools to ensure steady markets.

‘Clear Message’

“They are sacrificing short-term pain for long-term stability,” Naeimi at AMP Capital said. “When they let short-term lending rates spike and stood back for a while, they just wanted to send a clear message to banks that they should manage liquidity or reduce lending.”

The Topix has swung an average of about 3.1 percent daily since May 22. The gauge’s 30-day historic volatility was at 41.36 today, near its highest level since the 2011 earthquake and tsunami.

Foreign investors bought a net 171.2 billion yen ($1.75 billion) in Japanese stocks during the week ended June 21, the most since the week through May 17, according to figures released by the Finance Ministry today.

In contrast, Japanese institutions pared their domestic shares to 28 percent of the market’s total value at the end of March, the lowest ever, according to Japan Exchange Group Inc.

ReproCell Debut

On the JASDAQ market, ReproCell was bid at 17,510 as of 3:08 p.m. in Tokyo and is poised to begin trading more than five times higher than its IPO price of 3,200 yen. Founded in 2003, ReproCell is the first company licensed to generate induced pluripotent stem cells, or iPS cells, according to the company’s website. iPS cells could potentially be used to improve vision and treat cancer.

Japan’s government yesterday approved the world’s first clinical research using the cells, the Nikkei newspaper said.

Among stocks that fell, PeptiDream Inc. (4587) slumped 19 percent to 6,250 yen on the Tokyo Stock Exchange Mothers market for smaller companies, after plummeting 28 percent yesterday. The drugmaker canceled a research and development pact with Pfizer Inc. The TSE Mothers Index rose 0.6 percent after plunging 12 percent yesterday, its second-biggest fall this year.

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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