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Japan’s Stocks Gain on Capital Spending Outlook, U.S. Sentiment

Tokyo Stock Exchange
Employees talk during an afternoon trading session at the Tokyo Stock Exchange in Tokyo. Photographer: Kimimasa Mayama/Bloomberg

Japanese stocks gained for a third day as rising sentiment among U.S. consumers and an improved outlook for capital spending stoked expectations earnings will increase.

Nippon Yusen K.K., Japan’s largest shipping line by sales, climbed 5.1 percent on speculation higher trade volume will boost profit. Fanuc Ltd., Japan’s biggest maker of industrial robots, advanced 2.3 percent after a government report showed businesses plan to boost investment in equipment. Mitsubishi Estate Co. and Tokyu Land Corp. sent property companies higher after Credit Suisse Group AG raised their investment ratings to “outperform.”

“Japanese businesses are benefiting from the improved global economy, and I don’t think we have to worry about company earnings this year,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees more than $65 billion. “U.S. economic data remain resilient, and economies continue to improve globally.”

The Nikkei 225 Stock Average climbed 1.8 percent to 9,879.85 at the 3 p.m. close in Tokyo. The broader Topix index rose 1.4 percent to 878.56, with almost seven times as many shares advancing as falling.

The Topix index has lost 3.2 percent this year, set for its biggest six-month slide since December 2008, on concern mounting government deficits in Europe and measures by China to cool its property market will damp the global recovery. The slump has driven down the price of stocks in the gauge to 1.06 times book value, the lowest level among benchmark indexes for the world’s 15 biggest markets, according to data compiled by Bloomberg.

European Debt

“Stocks are undervalued with their price-to-book values having fallen to a ratio of about one,” said Masahiko Sato, an analyst at Nomura Holdings Inc.

In New York, the Standard & Poor’s 500 Index rose 0.4 percent on June 11 as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment advanced to 75.5 in June, the highest level since January 2008. Earlier, the S&P 500 had slid as much as 0.9 percent after a Commerce Department report showed sales at U.S. retailers dipped 1.2 percent in May, the first decline in eight months.

A Greece-triggered sovereign debt crisis in Europe prompted Japan’s Prime Minister Naoto Kan to call for cross-party cooperation in tackling Japan’s deficit. In his first policy address on June 11, Kan pledged to balance the country’s budget by 2020, saying inaction may send Japan into bankruptcy.

“This isn’t the right time for Japan to start fixing its fiscal problems,” said Mitsubishi UFJ’s Ishigane. “It will worsen the economy, reduce tax incomes and aggravate its budget deficit.”

Shipping Lines

Shipping lines posted the steepest advance among the Topix’s 33 industry groups. Nippon Yusen jumped 5.1 percent to 351 yen. Kawasaki Kisen, the third biggest by sales, rose 4.1 percent to 380 yen.

The Washington-based National Retail Federation said on June 10 that imports through major U.S. container ports may grow 15 percent year-on-year in September and 12 percent in October, traditionally the busiest month of the year.

Fanuc jumped 2.3 percent to 10,620 yen. Tsugami Corp., which makes machine tools, soared 13 percent to 616 yen. Japanese businesses plan to increase spending on plants and equipment by 9.7 percent this fiscal year, the government report showed before markets opened today. Companies had projected a decline three months ago.

Honda Strike

Mitsubishi Estate, Japan’s second-biggest property developer, rose 2.2 percent to 1,342 yen, and Tokyu Land jumped 5.2 percent to 347 yen. The stocks had their investment ratings raised from “neutral” by Credit Suisse Group on June 11. The brokerage also reiterated its “overweight” view on Japan’s property industry, saying markets for office buildings and condominiums will improve.

Honda Motor Co., the nation’s No. 2 automaker, climbed 4 percent to 2,711 yen and was the biggest contributor to the Topix’s advance. The majority of striking workers at Honda Lock (Guangdong) Co. in Zhongshan, agreed to an offer from the plant’s management, according to the company. The walkout followed two others at Honda suppliers in China that halted the automaker’s car production in the country.

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