Topix Advances for First Time in Five Days as Yen Falls

Photographer: Tomohiro Ohsumi/Bloomberg

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Photographer: Tomohiro Ohsumi/Bloomberg

A pedestrian holding an umbrella waits to cross a road in front of an electronic stock board outside a securities firm in Tokyo.

Japanese stocks rose, with the Topix (TPX) index posting its biggest advance in three weeks, as the yen retreated and shipping lines and utilities led gains among the gauge’s 33 industry groups.

Kawasaki Kisen Kaisha Ltd. (9107), Japan’s No. 3 shipper, climbed 6.3 percent on a report the sector’s first-quarter profit would rise. Yakult Honsha Co. jumped the most since 1984 after the yogurt-drink maker announced a share buyback. Dwango Co. surged 11 percent as Nippon Telegraph & Telephone Corp. and Nippon Television Holdings Inc. agreed to acquire a 6 billion yen ($61 million) stake in the Internet-content provider. Daiwa Securities Group Inc. rose 3.3 percent after Japan’s second-largest brokerage reported its highest first-quarter profit in more than 13 years.

The Topix added 1.8 percent to 1,148.53 at the close in Tokyo, with all subsectors rising. The gauge is headed for a 1.3 percent gain this month. The Nikkei 225 Stock Average climbed 1.5 percent to 13,869.82.

“For Japanese stocks, one positive is that concerns about a stronger yen have receded,” said Kenji Ueno, senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which oversees about 5 trillion yen ($51 billion). “Industries and stocks that fell a lot over the past four days are noticeably rising. It looks like investors buying on hopes for rebounds are the main driver.”

The Topix has climbed 34 percent this year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus to beat deflation. Investor attention is now shifting to proposed structural reforms and whether the sales tax will be raised as planned to rein in the country’s fiscal deficit and national debt.

Earnings Analysis

Earnings season for Topix companies peaks this week. Of the 78 companies on the gauge that have posted quarterly results and for which Bloomberg has estimates, 62 percent beat projections. Earnings per share at Topix companies are projected to almost double from the previous quarter, according to analyst estimates compiled by Bloomberg.

Shares gained as the yen fell against 14 of its 16 major counterparts today. Toyota Motor Corp. climbed 2.8 percent to 6,070 yen, providing the biggest boost to the Topix. Panasonic Corp., an electronics manufacturer that gets about half of revenue overseas, added 2.3 percent to 864 yen.

Shipping lines advanced on a Nikkei newspaper report that their earnings for the three months through June probably improved as a weaker yen boosted their dollar-denominated freight receipts.

Nippon Yusen K.K., Japan’s biggest shipping line, added 3.3 percent to 280 yen. Mitsui O.S.K. Lines Ltd., ranked No. 2, gained 4 percent to 386 yen, while Kawasaki Kisen jumped 6.3 percent to 204 yen.

Industrial Production

Japan’s industrial production fell 3.3 percent in June from May, the most since March 2011, the Trade Ministry said today in Tokyo. The median estimate of 29 economists in a Bloomberg survey was for a 1.5 percent decline. The country’s unemployment rate dropped to 3.9 percent in June from 4.1 percent in May, according to the government statistics bureau.

Futures on the S&P 500 rose 0.3 percent today. The measure declined 0.4 percent in New York yesterday after pending home sales dropped 0.4 percent in June, according to the National Association of Realtors.

The Federal Reserve has said economic data will determine the timing and pace of any reduction in its asset purchases. The central bank will probably maintain its benchmark interest rate at 0.25 percent after a policy meeting concluding on July 31, economists predicted. The Fed will begin to taper its $85 billion in monthly bond purchases in September, according to a Bloomberg survey.

Yakult Soars

Among other shares that advanced, Yakult Honsha jumped 17 percent to 4,935 yen. The company plans to buy back up to 4.35 percent of its shares for 33 billion yen, according to a statement to the Tokyo Stock Exchange today.

Dwango surged 11 percent, the most in a month, to 444,000 yen, as NTT and Nippon Television agreed to acquire shares in the mobile-content provider from Avex Group Holdings Inc. Daiwa Securities rose 3.3 percent to 839 yen after net income rose to 57.3 billion yen for the three months ended June 30.

GungHo Online Entertainment Inc., which surged tenfold this year through yesterday, slumped 13 percent on the Jasdaq market to 91,800 yen after the Internet-game developer reported sales that missed estimates yesterday.

The Topix traded at 1.23 times book value today, compared with 2.48 for the S&P 500 and 1.70 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s historic volatility was at 24.82 today, down 43 percent from a July 2 high of 43.21.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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

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