Topix Climbs Most in Three Months to Highest Since 2008

Japanese shares rose, with the Topix index advancing the most since September to a 2008 high, as the yen weakened amid optimism about global economic growth and retailers climbed on earnings.

Seven & I Holdings Co. jumped 6 percent after the supermarket and convenience-store company’s operating profit beat estimates. Nintendo Co. surged 11 percent after China lifted a 13-year ban on game consoles. Meidensha Corp. advanced the most on the Nikkei 225 Stock Average as SMBC Nikko Securities Inc. raised its target price for the electrical-machinery maker. Mitsubishi Motors Corp. sank 4 percent on plans to raise about $2.3 billion in a public share sale.

The Topix added 1.8 percent to 1,306.23 in Tokyo, its biggest gain since Sept. 19 and highest close since July 2008. The Nikkei 225 added 1.9 percent to 16,121.45. The U.S. trade deficit shrank more than forecast in November, while Managing Director Christine Lagarde said the International Monetary Fund plans to boost its global-growth outlook.

“The U.S. trade figures and the IMF’s plans to raise its global economic growth forecasts show that the world economy is on a recovery path,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities, a unit of Japan’s second-biggest lender. “The outlook is for U.S. fourth-quarter earnings to be favorable, and the expectations are also strong for Japanese company earnings.”

The JPX-Nikkei Index 400 climbed 1.8 percent to 11,800.26. The yen slipped 0.4 percent to 105.05 per dollar after weakening 0.4 percent yesterday.

The U.S. trade gap narrowed 12.9 percent to $34.3 billion, smaller than projected by any economist surveyed by Bloomberg and the least since October 2009, figures from the Commerce Department showed in Washington.

Earnings Season

“We expect to upgrade the global economic performance, but I cannot give actual figures now,” the IMF’s Lagarde told reporters in the Kenyan capital of Nairobi yesterday.

Earnings season began this week in Japan, with about 90 companies listed on the Topix (TPX) reporting through Friday, data compiled by Bloomberg show. The peak for announcing results is the first week of February, the data show.

Profit per share for companies on the gauge is expected to surge more than 270 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

Seven & I jumped 6 percent to 4,480 yen, its highest close since May 2006. The retailer reported 84.6 billion yen in operating profits for the quarter ended Nov. 30., beating the 81.6 billion yen estimate of five analysts surveyed by Bloomberg. Its target price was raised to 4,600 yen from 4,200 yen at Bank of America Corp.’s Merrill Lynch unit.

FamilyMart Climbs

FamilyMart Co., which also operates convenience stores, added 2.8 percent to 4,955 yen, its highest close in more than 13 years. Goldman Sachs Group Inc. and Bank of America Corp.’s Merrill Lynch unit increased their target prices on the shares. The company yesterday reported third-quarter operating profit of 10.8 billion yen, in line with analyst estimates.

“The expectation is that the U.S. economy this year will be even stronger than last year, which is good for stocks and Japanese exporters,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $47 billion. “Earnings so far are coming in better than expected. It looks like companies reliant on domestic demand and those dependent on overseas will both post good profits this year.”

Nintendo, the maker of Wii U game consoles, surged 11 percent 15,850 yen, its highest since July 2011. China’s ruling State Council temporarily suspended the ban and will draft new rules allowing consoles to be made in the Shanghai free-trade zone, it said in a statement Jan. 6. Nintendo led the Topix Other Products Index to the biggest advance among the 33 industry groups.

Meidensha Soars

Meidensha surged 15 percent to 433 yen, the most since June 2009. SMBC Nikko Securities raised its target price to 520 yen from 400 yen while maintaining its outperform rating.

Among shares that declined, Mitsubishi Motors lost 4 percent to 1,086 yen, the most on the Nikkei 225. The carmaker said it plans to raise as much as 241.6 billion yen in a share sale that’s designed to help it resume dividend payments for the first time in more than 15 years.

The Topix has fallen 1 percent this year for the second-worst performance among 24 major developed markets tracked by Bloomberg. The gauge advanced 51 percent in 2013, its third-biggest yearly gain on record, as Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda took steps to end 15 years of deflation. Strategists surveyed by Bloomberg expect the Topix to climb about 13 percent to 1,470 by the end of 2014, as the yen weakens amid prospects for further stimulus by the BOJ while the Federal Reserve cuts back.

Volume on the Japanese gauge was 20 percent above its 30-day average today. The measure traded at 1.33 times book value today, compared with 2.66 for the Standard & Poor’s 500 Index and 1.83 for the Stoxx Europe 600 Index yesterday.

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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