Japan’s Topix Rebounds as Yen Weakens, Developers Advance

Japan’s Topix (TPX) index climbed, led by real-estate companies, as the yen weakened today and after the gauge yesterday fell the most in more than a week as intensifying conflict in Ukraine spurred a global selloff.

Mitsubishi Estate Co. (8802), the country’s largest developer by market value, advanced 2.2 percent as a gauge of property companies led gains after falling four days. Euglena Co., which creates oil from seaweed, surged 14 percent after tweeting that ANA Holdings Inc. is showcasing the company’s biofuel at an expo today. A measure tracking metal-products companies dropped the most among the Topix’s 33 industry groups.

The Topix rose 0.6 percent to 1,204.11 at the close in Tokyo after sinking 1.2 percent yesterday. The Nikkei 225 Stock Average added 0.5 percent to 14,721.48. The MSCI World Index yesterday dropped the most in a month. The yen fell 0.4 percent to 101.81 per dollar after three days of gains.

“Shares are correcting yesterday’s drop,” said Naoki Fujiwara, a Tokyo-based chief fund manager at Shinkin Asset Management Co. “Japanese stocks to some extent priced in concerns surrounding the Ukraine tension yesterday. The yen isn’t strengthening as much as we expected.”

A human error saw Nikkei 225 futures stop trading in Osaka for more than 20 minutes today. The contracts resumed trading at 11:30 a.m. Tokyo time, Naoya Takahashi, a spokesman for Japan Exchange Group Inc., said by phone.

Crimea Crisis

Crimea, where ethnic Russians comprise the majority, has become the focal point of Ukraine’s crisis after an uprising triggered last month’s ouster of President Viktor Yanukovych. Ukraine has mobilized its army and called for foreign observers after Russian forces took control of the peninsula. Russia, which keeps its Black Sea fleet at Sevastopol, raised its key interest rate yesterday as asset prices plummeted.

Troops were ordered back to bases following military exercises in western Russia, Interfax newswire said, citing President Vladimir Putin’s spokesman Dmitry Peskov. The Russian military exercises ended on schedule, the country’s defense ministry said today.

The yen fell as much as 0.5 percent versus the dollar after touching 101.20 yesterday, the strongest since Feb. 5. Bank of Japan Governor Haruhiko Kuroda today said there’s momentum spurring the yen carry trade, referring to a strategy of borrowing in a low-rate market to fund purchases of higher-yielding assets.

The BOJ currently buys about 7 trillion yen ($69 billion) of Japan’s bonds every month to boost inflation to its 2 percent target through lower borrowing costs.

Developers Advance

The Topix Real Estate Index jumped 2.3 percent today, the most among the broader gauge’s industry groups. The measure plunged 5.5 percent in the four days through yesterday. The estimated price-to-earnings ratio for the subsector was at 27 today, compared with 38 at the start of the year, according to Bloomberg data.

Mitsubishi Estate jumped 2.2 percent to 2,424 yen. Sumitomo Realty & Development Co. Japan’s third-largest developer, added 3.6 percent to 4,186 yen. Mitsui Fudosan Co., Japan’s largest property company by sales, increased 2.1 percent to 3,044 yen.

Euglena surged 14 percent to 1,152 yen after earlier soaring as much as 29 percent. The company said on Twitter that airline ANA introduced Euglena’s biofuel made from seaweed at an expo today. Retail investors seem to be reacting to the tweet, SBI Securities Co. senior market analyst Nobuyuki Fujimoto said.

Among shares that fell, The Topix Metal Products Index lost 1.4 percent, one of only five industry groups to decline, along with shippers, miners, brokerages and glassmakers.

The Topix fell 7.5 percent this year, the biggest drop among major developed markets, according to data compiled by Bloomberg. The gauge traded at 1.18 times book value today, compared with 2.58 for the Standard & Poor’s 500 Index and 1.85 for the Stoxx Europe 600 Index yesterday.

Ukraine Uncertainty

Futures on the S&P 500 climbed 0.6 percent. The benchmark index yesterday slid 0.7 percent as concern Russia’s military presence in Ukraine could escalate outweighed stronger U.S. economic data. Reports yesterday showed manufacturing expanded at a faster pace than projected in February, while consumer spending rose 0.4 percent in January after a 0.1 percent gain the prior month.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; 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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