Japanese Shares Rise as Yen Weakens, China Data Improve

Japanese shares rose, after the Topix (TPX) index last week posted its fourth straight monthly loss, as a weaker yen boosted carmakers and data signaled a recovery in domestic capital spending and Chinese manufacturing.

Toyota Motor Corp., Asia’s biggest automaker, gained 1 percent. Fanuc Corp., a producer of industrial robotics that counts on Asia excluding Japan for half its revenue, climbed 2.7 percent after a gauge of China’s factory activity increased to a 16-month high. Consumer-finance company Aiful Corp. surged 18 percent on a report non-bank lending is recovering. Otsuka Holdings Co. slid 2.4 percent after Citigroup Inc. cut its investment outlook on the drugmaker.

The Topix added 1.1 percent to 1,117.78 at the close of trading in Tokyo, with all but four of the 33 industry groups advancing. The measure fell 2.3 percent in August, capping its longest monthly losing streak since November 2008. The Nikkei 225 increased 1.4 percent today to 13,572.92. Japan’s currency weakened 0.8 percent to 98.93 against the greenback.

“The yen at the 98-per-dollar level today is positive for stocks,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11.2 trillion yen ($113 billion). “China’s PMI is also being taken positively, although whether it can last is questionable. Capital-spending data is supportive for an increase in Japan’s economic growth outlook, so that’s also a plus.”

Futures on the Standard & Poor’s 500 Index climbed 0.7 percent today. The measure lost 0.3 percent on Aug. 30, capping its worst monthly drop since May 2012, as investors weighed prospects for a military response to an alleged chemical weapons attack in Syria and a less-than-forecast rise in consumer spending. U.S. markets are closed today for a holiday.

China Manufacturing

The official Purchasing Managers’ Index of Chinese manufacturing was at 51.0, beating analysts’ estimates. HSBC Holdings Plc and Markit Economics today released the final reading of a similar private gauge showing a level of 50.1. A reading above 50 denotes expansion.

Fanuc gained 2.7 percent to 15,420 yen. Komatsu Ltd., a machinery manufacturer that gets about 8 percent of sales from China, climbed 0.9 percent to 2,175 yen. Mitsubishi Heavy Industries Ltd. (7011), which counts on Asia excluding Japan for 16 percent of its revenue, rose 2.8 percent to 554 yen.

Best Performer

Even after falling 12 percent from this year’s May 22 peak, Japanese equities are still the best performers in 2013 among developed markets, amid optimism Prime Minister Abe and the Bank of Japan can lead the country out of deflation through unprecedented monetary easing and spur economic growth.

Capital spending in Japan was unchanged from a year earlier in the second quarter, recovering from a 3.9 percent drop in the first three months of the year, the Finance Ministry said today in Tokyo. Analysts surveyed by Bloomberg projected a 2.1 percent decline.

JPMorgan Chase & Co. expects an upwards revision to Japan’s gross domestic product in the period because of the better-than-expected data, Masamichi Adachi, senior economist at the investment bank, said by phone today.

Prime Minister Shinzo Abe’s bid to raise the sales tax got a boost as Economy Minister Akira Amari said on Aug. 31 a majority of officials in seven consultative panels favored proceeding with the increase in April.

The yen fell 0.8 percent to 98.93 per dollar today and retreated against all of its major peers. Toyota, which gets 31 percent of sales from North America, gained 1 percent to 6,000 yen. Honda Motor Co., which generates 83 percent of revenue abroad, added 0.7 percent to 3,570 yen.

Consumer Lending

The Topix Other Financing Business Index of consumer-finance stocks rose the most among the Topix industry groups, climbing 4.6 percent. Consumer lending will turn positive for the first time in eight years amid increasing spending by individuals, the Nikkei newspaper reported today. Japan’s top three consumer lenders’ lending balance climbed to 1.9 trillion yen at the end of June, the report said.

Aiful soared 18 percent, the most since April 8, to 963 yen. Acom Co., Japan’s second-biggest consumer-finance company by market value, jumped 14 percent to 2,795 yen.

Among stocks that fell, Otsuka Holdings (4578) sank 2.4 percent to 2,973 yen, the biggest drop since Aug. 8. The company was cut to neutral from buy at Citigroup, which also reduced its target share price to 3,200 yen from 4,100 yen.

The Topix traded at 1.17 times book value today, compared with 2.40 for the S&P 500 and 1.67 for the Stoxx Europe 600 Index on Aug. 30. The Japanese gauge’s 30-day historic volatility was at 26.84 today, compared with its five-year median of 19.42.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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