Japan’s Topix index rose on heavy volume, almost erasing its loss for 2014, after a supporter of pension reform was named minister overseeing retirement savings.
The Topix increased 0.4 percent to 1,301.52 at the close in Tokyo, bringing its advance from an April 14 low to 15 percent and paring its drop this year to less than 0.1 percent. The Nikkei 225 Stock Average added 0.4 percent to 15,728.35 today. Prime Minister Shinzo Abe appointed Yasuhisa Shiozaki, an advocate of changing how the $1.2 trillion Government Pension Investment Fund is run, as health minister.
“Shiozaki’s appointment sends a big message to the market,” said Yusuke Kuwayama, a portfolio manager at Tokio Marine & Nichido Fire Insurance Co. in Tokyo. “The yen has fallen on bets GPIF will boost the weighting for overseas assets, and investors increasingly expect the fund to raise its allocation to Japanese stocks.”
Yokogawa Electric Corp. surged 9.1 percent for its biggest advance since 2010 after the electronic-component maker announced job cuts and its rating was raised at JPMorgan Chase & Co. Renesas Electronics Corp. surged 17 percent after the semiconductor manufacturer said a government-backed fund’s stake in the company is too large. Daiwa Securities Group Inc. (8601), Japan’s second-biggest brokerage, gained 1 percent.
The yen touched its lowest since Jan. 10 before reversing its decline after the cabinet announcements and gaining 0.2 percent to 104.92 per dollar. Trading volume on the Topix was 27 percent higher than the 30-day average today.
Shiozaki is considered a pro-market reform voice within the ruling Liberal Democratic Party, and his appointment underlines Abe’s determination to spur better returns on pension assets.
GPIF is expected to increase its target for Japanese shares to 20 percent of holdings and reduce domestic bonds to 40 percent, according to a Bloomberg News survey in May.
The fund’s investment results for the three months ended June, released last week, signaled it didn’t plow money into Japanese equities during that period. GPIF would need to buy 3.5 trillion yen of domestic stocks to reach the 20 percent level, according to calculations by Bloomberg based on its figures for holdings at the end of June.
The Topix (TPX) climbed as much as 0.8 percent today after closing 1.1 percent higher yesterday on bets Shiozaki would be appointed to the post. Shares pared gains today after Chief Cabinet Secretary Yoshihide Suga announced the cabinet changes.
“We think the market has gone too far,” said Benjamin Collett, Hong Kong-based head of Asian equities at Sunrise Brokers LLP. “It’s priced in the yen, and priced in the reshuffle. We’re taking profits.”
Yokogawa Electric surged 9.1 percent to 1,356 yen, the largest advance since February 2010. The company will cut 600 jobs through buyouts in March, it said yesterday after the close. JPMorgan raised its rating on the stock to neutral from underweight.
Renesas soared 17 percent to 1,024 yen, its highest close since May 2010. The controlling interest held by the government-backed Innovation Network Corp. of Japan fund, known as INCJ, is “abnormal,” Renesas Chief Executive Officer Hisao Sakuta said yesterday. The comment suggests INCJ and others are willing to sell down their stakes because Renesas has been successful in restructuring, according to Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd.
Shippers posted the biggest gains among the 33 Topix industry groups, followed by consumer lenders, banks and brokerages.
Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, gained 3.6 percent to 258 yen. Sumitomo Mitsui Trust Holdings Inc. increased 2.2 percent to 448.2 yen. Daiwa Securities climbed 1 percent to 880.7 yen.
Among stocks that fell, Nippon Steel & Sumitomo Metal Corp., the nation’s biggest steelmaker, slid 1.6 percent to 294.9 yen. An explosion at its Nagoya plant injured more than 12 people, with three people taken to hospital, an official from Tokai city who asked not to be identified said.
The Topix traded at 1.3 times book value today, compared with 2.7 for the Standard & Poor’s 500 Index and 1.9 for the Stoxx Europe 600 Index yesterday.
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