Japan Shares Gain for Fifth Day Amid U.S. Deal Optimism

Japanese shares rose, with the Topix index posting its longest winning streak in three months, as paper makers surged and amid optimism U.S. lawmakers will reach a deal to avoid breaching the debt ceiling.

Oji Holdings Corp. climbed the most on the Nikkei 225 Stock Average after a report paper manufacturers may sell surplus electricity. Sony Corp. (6758), which gets almost 70 percent of sales abroad, gained 1 percent. Maeda Corp. jumped 4.2 percent after Mitsubishi UFJ Morgan Stanley Securities Co. boosted its outlook on the general contractor. Dowa Holdings Co. sank 5.9 percent after the metal producer’s profit forecast missed estimates.

The Topix added less than 0.1 percent to close at 1,197.47 in Tokyo. The gauge last capped a five-day advance on July 3. Volume today was about 28 percent below the 30-day average. The Nikkei 225 increased 0.3 percent to 14,441.54. Markets were closed yesterday for a holiday.

“The market is revolving on optimism that things will somehow work out,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11.2 trillion yen ($114 billion). “If investors’ hopes are dashed, fear will come to the forefront again and markets will tumble in a big way. But for now people are generally in wait-and-see mode.”

Futures on the Standard & Poor’s 500 Index added 0.1 percent. The measure rose 0.4 percent yesterday, leaving it less than 1 percent away from a record, amid signs politicians may reach a deal before the government loses its ability to borrow money Oct. 17.

Deal Discussions

An agreement being discussed by Democrat and Republican Senate leaders would suspend the debt limit through Feb. 7 and fund the government through Jan. 15, according to a person familiar with the matter who spoke on condition of anonymity. A partial government shutdown began Oct. 1 after Congress failed to pass a spending authorization bill for the financial year.

Some exporters gained. Sony, the maker of PlayStation gaming consoles and Bravia TVs, rose 1 percent to 1,938 yen. Mitsubishi Motors Corp., which gets more than 80 percent of sales overseas, added 0.8 percent to 1,041 yen.

“It’s beginning to sink in among U.S. political parties that it’ll be a catastrophe if they don’t reach a deal on the debt limit, and they’re starting to compromise,” said Toshihiko Matsuno, a strategist at Tokyo-based SMBC Friend Securities Co., a unit of Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender by market value. “In Japan, earnings season is about to heat up and there’s a lot of optimism companies will raise their forecasts.”

Earnings Season

Twenty-three companies on the Topix are due to report results this week. Earnings per share on the gauge are projected to jump 56 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

Fuji Heavy Industries Ltd. (7270), which makes Subaru cars, climbed 0.8 percent to 2,815 yen, its highest close since July 24. The company may report a 250 percent increase in operating profit to a record 150 billion yen for the half year through September, the Nikkei newspaper reported, without saying where it got the information. Earnings were boosted by a weaker yen and sales of sport-utility vehicles in Japan and the U.S., according to the report.

Maeda advanced 4.2 percent to 673 yen after its shares were raised to outperform from neutral by Mitsubishi UFJ Morgan Stanley. Kajima Corp., which was also upgraded to outperform by the brokerage, gained 1 percent to 403 yen. Shimizu Corp. (1803), which was boosted to neutral from underperform, rose 1.7 percent to 486 yen.

Power Shift

Oji Holdings, Japan’s biggest paper maker by market value, gained 6.2 percent to 496 yen. Manufacturers in the sector are moving into electricity retailing ahead of deregulation starting in 2016, the Nikkei newspaper reported, without citing anyone. Oji may spend about 30 billion yen by 2015 on generating facilities to be able to provide about 1.1 billion kilowatt-hours a year, the report said.

Nippon Paper Industries Co., which currently generates about 17 million kilowatts according to the Nikkei, advanced 4 percent to 1,573 yen.

Among stocks that fell, Dowa Holdings declined 5.9 percent to 942 yen. The company raised its full-year net income forecast by 5.6 percent to 19 billion yen. Analysts surveyed by Bloomberg had expected an increase to 20.4 billion yen.

The Topix traded at 1.25 times book value today, compared with 2.51 for the S&P 500 and 1.75 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 17.97 today, compared with its five-year median of 19.31.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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

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