Topix Rises After Steepest Weekly Decline Since April

Japanese stocks rose, after the Topix (TPX) index posted its biggest weekly drop since April, as exporters climbed on a weaker yen and SoftBank Corp. advanced.

Sumitomo Dainippon Pharma Co. surged 5.4 percent to lead gains on the Nikkei 225 Stock Average after Barclays Plc upgraded the shares. SoftBank advanced 2.3 percent, providing the biggest boost to the Topix, after a report the wireless carrier reached an agreement to buy T-Mobile US Inc. Honda Motor Co., which gets about 84 percent of sales overseas, rose 1.2 percent, pacing gains among exporters.

The Topix rose 0.8 percent to 1,265.46 at the close in Tokyo, with more than three stocks rising for each that fell. The measure lost 2.3 percent last week, declining each day for the largest decrease since the period ending April 11. The Nikkei 225 climbed 0.9 percent today to 15,296.82. The yen weakened 0.1 percent to 101.40 per dollar after strengthening 0.8 percent last week.

“The supply-and-demand balance is clearly a plus, as there are expectations that public pensions and the Bank of Japan may be buying,” said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. “But there’s a sense of overheating, and the adjustment in Japanese shares is likely to continue this week.”

Last week’s Topix drop came after the measure rebounded as much as 12 percent from a May 21 low on optimism about the global economy and that Japan’s $1.2 trillion retirement fund will add to holdings of local stocks.

Industrial Output

“There’s no strong reason to buy Japanese shares, but it’s rising to make up for the five-day fall last week,” said Yoshihiro Okumura, a general manager at Chiba-Gin Asset Management Co. in Tokyo. “Industrial production may have had an impact, though it didn’t veer far from estimates.”

Japan’s industrial output increased 0.7 percent in May from the previous month, faster than than an earlier estimate of a 0.5 percent expansion, according to final figures released today by the Ministry of Economy, Trade and Industry.

The Government Pension Investment Fund may announce the results of its asset review as soon as September and boost its target for Japanese shares to as high as 20 percent from the current 12 percent, the Nikkei newspaper reported July 12, without saying where it got the information.

The Bank of Japan started a two-day policy meeting today, with all 34 economists surveyed by Bloomberg expecting the monetary authority will maintain the pace of its monthly bond-buying. Thirty-two percent of economists in a separate survey forecast the BOJ will expand stimulus on October 31.

Thirty-one Topix members are due to report earnings this week, according to data compiled by Bloomberg.

Schizophrenia Treatment

Sumitomo Dainippon Pharma jumped 5.4 percent to 1,208 yen, its biggest gain since January. Barclays raised its rating on the drugmaker to equal weight from underweight and increased its target price for the shares to 1,200 yen from 990 yen. The upgrade reflects higher sales estimates for schizophrenia treatment Latuda, analyst Atsushi Seki wrote in a report.

Softbank, (9984) the wireless carrier controlled by billionaire Masayoshi Son, gained 2.3 percent to 7,649 yen. The company reached a “basic agreement” for its unit Sprint Corp. to buy T-Mobile from Deutsche Telekom AG, the Nikkei newspaper reported.

Exporters advanced as the yen headed for its first decline in three days. Honda climbed 1.2 percent to 3,557 yen. Nissan Motor Co. (7201), which gets about 78 percent of sales of sales outside Japan, added 1.1 percent to 982 yen. Olympus Corp., the world’s biggest endoscope maker, jumped 2.3 percent to 3,710 yen.

Minebea Co. added 2.2 percent to 1,209 yen. The maker of electronic devices and components will boost its cost competitiveness through planned improvements in the production of backlights for liquid-crystal display panels, the Nikkei newspaper reported, citing unidentified people from the company.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@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

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