Topix Index Halts Two-Day Decline as Japan Tobacco Climbs

Japanese shares rose, with the Topix index (TPX) halting a two-day decline, as Japan Tobacco Inc. and seafood producers advanced.

Japan Tobacco, the nation’s largest producer of cigarettes, climbed 1.3 percent for the biggest boost to the Topix. The Topix Fishery Agriculture & Forestry Index gained 1 percent, the most among the broader gauge’s 33 industry groups. Lawson Inc. added 1.4 percent after a report the convenience-store company’s operating profit may gain. Mitsui Fudosan Co. (8801), Japan’s No. 1 real estate developer, slid 1.9 percent as shares in its additional equity offering began trading today.

The Topix added 0.1 percent to 1,268.50 at the close of trading in Tokyo after falling as much as 0.7 percent. About two shares rose for each that fell. The Nikkei 225 Stock Average added 0.1 percent to 15,376.24. The yen traded at 101.97 per dollar after rising 0.1 percent yesterday.

“If the economy goes as it should, then earnings are likely to be revised up, and the market will probably get stronger in the second half of the year as it prices that in,” said Kenji Ueno, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co. “The negative factors for the economy are starting to recede and the hope is that fundamentally the market will move up.”

The Topix has gained 10 percent from its May 21 low, outperforming the MSCI World Index’s 3.6 percent advance in the period.

Overheating Signals

The 25-day Toraku Index, which compares the numbers of advancing and declining stocks on the Topix, rose to its highest level since December 2012 yesterday, signaling to some investors that shares have climbed too far, too fast. The Topix’s 14-day relative strength index rose to 73 yesterday. A reading above 70 indicates stocks may be poised to drop.

“Japanese shares were overheating recently and needed a bit of a breather,” said Tomomi Yamashita, who helps oversee the equivalent of $5 billion at Shinkin Asset Management Co. in Tokyo. “But it doesn’t look like the domestic economy suffered as badly from the sales-tax increase as forecast, so the broader trend is for gloomy expectations to be corrected.”

Futures on the Standard & Poor’s 500 Index were little changed today. The measure retreated for the first time in seven sessions yesterday as General Electric Co. led industrial shares lower, overshadowing gains among energy producers.

Japan Tobacco

Japan Tobacco gained 1.3 percent to 3,707 yen, its highest close since Nov. 21. Maruha Nichiro Corp., a fisheries company, rose 1 percent to 1,646 yen. Kyokuyo Co., which distributes seafood, rose 1.6 percent to 261 yen.

Lawson advanced 1.4 percent to 7,450 yen. The Nikkei newspaper reported the convenience store operator is likely to report an operating profit of 17 billion yen, compared with estimates from 14.6 billion yen to 15.3 billion yen in a Bloomberg survey of analysts. The company’s chairman, Takeshi Niinami, will be hired as president by Suntory Holdings Ltd. in October, according to people familiar with the matter. The Nikkei earlier reported the move.

Mitsui Fudosan slid 1.9 percent to 3,451 yen, with real estate companies falling the second-most among the Topix’s industry groups. The developer’s additional share offering began trading today, with the company saying on June 16 it expected proceeds of 329 billion yen.

Japan’s cabinet may approve the Prime Minister Shinzo Abe’s growth plan today, Kyodo news reported on June 19. The premier will hold a press conference at 6:30 p.m. today.

“If there is a surprise in the growth strategy then that’s a different story, but if it’s just what’s been reported, it’s going to be difficult to use it as a reason to buy,” said SMBC Friend’s Matsuno. “There’s a chance that it’ll be a catalyst to sell shares, though it’s unlikely the Nikkei 225 will break below 15,000.”

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Yuko Takeo in Tokyo at ytakeo2@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond, Jim Powell

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.