Japan Shares Advance as Yen Drops, Bernanke Eases Concern

Japanese shares rose, with the Topix (TPX) index climbing for a fourth day, as the yen weakened and Federal Reserve Chairman Ben S. Bernanke eased concerns the U.S. is on a preset course to taper stimulus.

Fuji Heavy Industries Ltd., a maker of cars and heavy machinery that gets about 65 percent of sales overseas, climbed 2.1 percent. SoftBank Corp. (9984), the mobile carrier that became the third-biggest Topix company by market value yesterday, gained 4 percent after announcing a fuel-cell joint venture. Toshiba Corp. (6502) climbed 2.3 percent after the Nikkei newspaper said the chipmaker plans to expand capacity. KLab Inc. (3656) surged 24 percent after the software developer said it plans to form a mobile-game tie-up with Japan’s No. 2 advertising company.

The Topix added 0.7 percent to 1,222.01 at the close in Tokyo, with 26 of the 33 industry groups advancing. Volume was 14 percent below the 30-day average. The Nikkei 225 Stock Average rose 1.3 percent to 14,808.50.

“Some investors view the Bernanke speech as a positive signal they will continue easing for the foreseeable future,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., which oversees the equivalent of $27 billion. “Still, the response is mixed. There are still many ‘ifs.’”

After plunging as much as 18 percent from a May 22 high, the Topix has rebounded amid optimism Prime Minister Shinzo Abe will push through economic reforms following elections on July 21. The gauge added 14 percent in the past four weeks, the biggest such advance since April 2009.

Bernanke Comments

Futures on the S&P 500 fell 0.1 percent today. The measure added 0.3 percent in New York yesterday after Bernanke’s testimony to Congress. The Fed’s asset purchases “are by no means on a preset course” and could even be expanded should economic conditions warrant, he said in his policy address.

Central-bank officials have been debating the timing of cuts in $85 billion of monthly bond purchases. Bernanke has said any reduction will be tied to improvement in the labor market or an acceleration of inflation. The U.S. economy maintained a “modest to moderate pace” of growth in recent weeks, the Fed said in its Beige Book business survey.

Japan’s currency weakened 0.6 percent to 100.18 per dollar today, after falling 0.5 percent yesterday. The yen is the worst-performing major currency since mid-November. A weaker yen boosts the value of Japanese exporters’ earnings when repatriated.

“The yen didn’t climb strongly, and U.S. stocks didn’t slide, which is ideal for the Japanese stock market,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. Still, “Japanese shares have risen quite high and we need more catalysts to rise further. The yen needs to weaken to about 105 per dollar.”

Technical Indicators

The Topix’s Relative Strength Index, which tracks the velocity of price changes, was at 67.21 today, near the 70 threshold some traders see as a sign that stocks may be poised to fall. The 25-day Toraku Index, which compares the numbers advancing and declining stocks on the gauge, reached 132.57 yesterday, above the 130 level some investors say signals stocks may decline.

SoftBank gained 4 percent to 6,450 yen after the company controlled by billionaire Masayoshi Son announced plans to enter the fuel-cell business in Japan in partnership with California startup Bloom Energy Corp. Using fuel-cell units reduces the risk of blackouts, such as those that occurred in Japan after the March 2011 Fukushima accident, since they’re not dependent on centralized power plants.

Toshiba rose 2.3 percent to 493 yen, its highest level in seven weeks, as the Nikkei reported the chipmaker plans to invest 30 billion yen to add equipment for flash memory at its plant in Mie prefecture, western Japan, reflecting increased demand for smartphones. Production is expected to start in fiscal 2014, the newspaper said.

KLab Surges

KLab jumped 24 percent to 1547 yen for its second-largest gain on record. The software developer is planning to form a mobile-game alliance with Hakuhodo Inc. The Tokyo-based firm will also sell shares to the advertising company.

The Topix traded at 1.3 times book value today, compared with 2.48 for the S&P 500 and 1.67 for the Stoxx Europe 600 Index yesterday. The gauge’s 30-day historic volatility was at 29.82 today, down 31 percent from its July 2 high of 43.22.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Masahiro Watanabe in Tokyo at mwatanabe47@bloomberg.net

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

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