Japan’s Topix Index Snaps Two-Day Loss on Yen, GPIF

Japan’s Topix index rose, after falling the past two days, as the yen extended declines and investors weighed recommendations that the country’s $1.21 trillion pension fund invest more in risk assets.

Honda Motor Co., which gets more than 80 percent of revenue abroad, jumped 3.4 percent as the yen slipped against the dollar. Minebea Co. gained 5.7 percent after Barclays Plc raised its rating on the ball-bearings maker. Mitsubishi Estate (8802) Co. paced a decline by property stocks as JPMorgan Chase & Co. cut its outlook on Japan’s biggest developer by market value.

The Topix climbed 1 percent to 1,246.31 at the close in Tokyo, after losing 0.7 percent over the last two days. The Nikkei 225 Stock Average increased 1.9 percent today to 15,365.60. A panel yesterday urged Japan’s government pension fund to diversify away from domestic bonds, while the Federal Reserve indicated stimulus may be cut in coming months. The Bank of Japan kept monetary policy unchanged today.

“Reviewing GPIF’s asset mix is likely to take some time, but some investors are hopeful they’ll increase investments in risk assets sooner than expected,” said Takashi Aoki, who helps oversee the equivalent of $37.6 billion in Tokyo at Mizuho Asset Management Co. “While U.S. and European shares have been surging in recent months, Japan’s performance has been lackluster, so we’re now seeing a catch-up rally.”

Relative Performance

The Standard & Poor’s 500 Index (SPX) gained 5.9 percent from the start of October through yesterday, hitting a record high on Nov. 15. The Stoxx Europe 600 Index climbed 4 percent in the period, closing at its highest level since May 2008 on Nov. 18. The Topix’s advanced 3.3 percent in that span, and after today’s gain remains 2.3 percent short of its highest close this year on May 22.

Futures on the S&P 500 slipped 0.1 percent. The gauge slid 0.4 percent yesterday. Fed policy makers expected that economic data will show ongoing improvement in the labor market and “thus warrant trimming the pace of purchases in coming months,” according to the record of the Federal Open Market Committee’s Oct. 29-30 gathering.

The yen slid 0.7 percent to 100.75 per dollar today, its lowest level since July 19. Japan’s currency retreated against all its 16 major peers.

Honda, which counts North America as its biggest market, gained 3.4 percent to 4,240 yen. Panasonic Co., which gets nearly half its revenue outside Japan, added 2.3 percent to 1,070 yen. Sony Corp. (6758), which generates almost 70 percent of sales abroad, gained 1.4 percent to 1,894 yen.

Inflation Goal

The central bank today stuck with a pledge to expand the monetary base by 60-70 trillion yen ($600-$700 billion) a year. The BOJ will need to extend the timeframe for achieving a 2 percent inflation target as it refrains from enlarging its asset-purchase program, economists forecast in a Bloomberg News survey. Twenty-two of 37 analysts see Governor Haruhiko Kuroda’s board altering the objective adopted in April. JPMorgan Chase says the change may come in April or July next year, pushing back the timeframe to the fiscal year starting April 2016.

Japan’s Government Pension Investment Fund needs more independence from bureaucrats and should put some of the world’s biggest retirement savings pool into private equity and commodities, an expert panel said yesterday.

The fund should also look at increasing holdings of overseas assets and diversifying into real-estate investment trusts, where returns may be higher than on local sovereign bonds, and it should consider investing in infrastructure and inflation-linked Japanese government debt, the panel said.

KDDI, Minebea

Among other shares that gained, KDDI Corp. jumped 6.3 percent to 6,430 yen, the most on the Nikkei 225 (NKY) and its highest close in more than 13 years. The mobile-phone company has jumped more than 25 percent since reporting earnings on Oct. 28.

Minebea advanced 5.7 percent to 710 yen for the second-biggest gain on the Nikkei 225. Barclays raised its rating on the stock to overweight from equalweight, while boosting its price target to 830 yen from 540 yen.

Mixi Inc., an social-networking site operator, surged 22 percent to 1,640 yen, the most since listing in 2006. The company’s “Monster Strike” game moved up the Apple Inc. iTunes app rankings today to become the 25th most popular free game, compared to an average ranking of 46th this month, according to the AppDB website.

Just three groups fell among the 33 Topix (TPX) industry sectors today, airlines, developers and utilities.

Mitsubishi Estate sank 0.5 percent to 2,837 yen. JPMorgan cut its rating on the stock to neutral from overweight, while Mitsubishi UFJ Morgan Stanley Securities Co. also reduced its outlook for the developer to neutral from outperform.

Tepco Slides

Japan Airlines Co. slipped 1.5 percent to 5,300 yen for the biggest loss in its sector. Tokyo Electric Power Co. led declines among utilities, slipping 1.7 percent to 537 yen. The company detected smoke at the security office of its Kashiwazaki-Kariwa nuclear plant today, it said in a statement. No radiation leaked to outside the facility, it said.

Mitsui Chemicals Inc. slumped 2.4 percent to 241 yen to lead declines on the Nikkei 225. Iwai Cosmo Securities Co. cut its rating on the stock to neutral from neutral plus.

Shares on the Topix traded at 1.27 times book value today, compared with 2.57 for the S&P 500 and 1.80 for the Stoxx Europe 600 Index yesterday. The Japanese measure’s 30-day volatility was 15.56 today, down from its five-year median of 19.

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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