Japan’s Topix Index Climbs After Selloff on Earnings

Japan’s Topix index rose, paring the gauge’s biggest selloff in eight months yesterday, as earnings from companies including Toyota Motor Corp. and Panasonic Corp. cheered investors.

All 33 Topix (TPX) subgroups gained. Toyota advanced 6 percent after saying it expects full-year profit to rise to a record. Panasonic, the consumer-electronics maker pivoting toward products for cars and homes after record losses, surged the most in almost 40 years of trading as third-quarter net income topped estimates. Sony Corp. rose 4.6 percent on reports the company will sell its Japanese personal-computer unit.

The Topix rallied 2.1 percent to 1,162.64 at the close of trading in Tokyo. The measure fell 4.8 percent yesterday, the most since June 13, capping a 13 percent decline from a Jan. 8 peak. The Nikkei 225 Stock Average climbed 1.2 percent today to 14,180.38. The yen traded at 101.43 per dollar today after sliding 0.7 percent yesterday.

“Earnings are a key,” said Andrew Sullivan, a Hong Kong-based director of sales trading at Kim Eng Securities. “Those with positive guidance and beating estimates are in focus today, while any misses are getting sold off. Japan is also rebounding as the yen weakened overnight.”

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The measure gained 0.8 percent yesterday, rebounding from a three-month low as investors assessed corporate earnings and data showing factory orders fell less than estimated in December. Orders slipped 1.5 percent, compared with the average economists’ estimate of a 1.8 percent decline in a Bloomberg survey, data from the Census Bureau showed yesterday.

Buy Zone

The 14-day Relative Strength Index on the Topix fell to 25.8 yesterday, its lowest since June 4. A reading below 30 indicates to some traders that stocks are due to rise.

“Shares in Japan, as well as the U.S. and Europe, are technically in the buy zone, so the scene is set for rebounds,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-biggest lender.

Some 640 Topix companies post earnings this week, the busiest period of reporting season. Of the 187 companies on the gauge that have filed quarterly results since Jan. 1 and for which Bloomberg has estimates, 64 percent beat analyst projections for profit.

Toyota gained 6 percent to 5,830 yen for the biggest boost to the Topix. The world’s biggest carmaker yesterday reported profit quintupled last quarter and raised its forecast for the fiscal year ending March 31 to an unprecedented 1.9 trillion yen ($18.7 billion).

Panasonic Surges

Panasonic soared 19 percent to 1,262 yen for the biggest gain on the Nikkei 225 Stock Average. Net income at Japan’s largest maker of consumer electronics rose 20 percent to 73.7 billion yen, compared with the 44 billion-yen average estimate of three analysts surveyed by Bloomberg News.

Oki Electric Industry Co., which makes computers and automated-teller machines, surged 17 percent to 252 yen after boosting its net-income forecast by 67 percent. Oki Electric’s jump was the second-biggest on the Nikkei 225.

Sony advanced 4.6 percent to 1,600 yen, the most since June 10. The company is in talks to sell its Japanese personal-computer business to buyout firm Japan Industrial Partners Inc., according to a person with knowledge of the situation, who asked not to be identified before a public announcement. Sony may also announce a wider restructuring that includes job cuts as it considers what to do with its PC operations in the rest of the world, the person said.

The Topix traded at 1.16 times book value today. That compares with 2.49 for the S&P 500 and 1.77 the Stoxx Europe 600 Index yesterday. The Japanese gauge’s price-to-estimated-earnings ratio was 14 today, compared with 14.9 for the S&P 500 and 13.5 for the Stoxx Europe 600. Volume on the Japanese gauge was 34 percent above the 30-day average today.

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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