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Japanese Stocks Rise; Carmakers Gain, Trading Companies Drop

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Nov. 17 (Bloomberg) -- Japanese stocks rose, led by automakers on a weaker yen. Commodity-related shares slid after oil and metal prices plunged on concern China’s measures to cool inflation will slow global growth.

Mazda Motor Corp., Japan’s second-largest car exporter climbed 3.1 percent after companies agreed to buy its shares from Ford Motor Co. Bridgestone Corp., the nation’s No. 1 tire maker that gets more than 75 percent of its sales overseas, gained 3.4 percent. Mitsubishi Materials Corp., a non-ferrous metal producer, tumbled 4 percent. Komatsu Ltd., a maker of earth movers that gets about 20 percent of its revenue in China, lost 0.5 percent.

The Nikkei 225 Stock Average rose 0.2 percent to 9,811.66 at the 3 p.m. market close in Tokyo after falling as much as 1.1 percent. The broader Topix index gained 0.3 percent to 850.30 with three stocks advancing for every two that retreated.

“Japanese stocks, which had declined because of a lack of confidence in earnings, are on their way to catching up with other markets,” as the yen weakens, said Masaru Hamasaki, who helps oversee about $17 billion as chief strategist in Tokyo at Toyota Asset Management Co. “Once the yen falls below the 85 yen level, confidence for corporate earnings should rise and shares should advance.”

The Topix has dropped 6.3 percent this year, compared with gains of 5.7 percent by the S&P 500 and 4.8 percent by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark are valued at 15 times estimated earnings, compared with 13.9 times for the S&P 500 and 12 times for the Stoxx 600.

Automakers Climb

The yen depreciated to 83.59 against the dollar about 3 a.m. in Tokyo today, the weakest level since Oct. 5. That boosts the value of overseas income at Japanese companies when converted into their home currency.

Automakers advanced after the Nikkei English News said Ford Motor Co. agreed to sell Mazda shares to companies including Itochu Corp. and Kajima Corp.

Mazda jumped 3.1 percent to 231 yen. Toyota Motor Corp., the world’s largest carmaker, gained 0.5 percent to 3,170 yen. Honda Motor Co., Japan’s No. 2 carmaker, rose 2 percent to 3,085 yen and was the biggest support for the Nikkei and the Topix.

“Foreign investors had seen Japanese stocks as underperformers but they are revising their asset allocation of Japanese stocks,” after the trend of the yen’s strengthening stopped, Gentoku Kiyokawa, operating officer at BNP Paribas Investment Partners in Tokyo.

Bridgestone Gains

Bridgestone Corp., the world’s largest tire maker, jumped 3.4 percent to 1,536 yen. Sony Corp., the maker of Bravia televisions, gained 1.4 percent to 2,882 yen. Nintendo Co., the world’s biggest maker of portable video-game machines, advanced 1.8 percent to 21,900 yen.

Nippon Express Co., a freight company, jumped 3 percent to 340 yen after Deutsche Bank AG analyst Seigo Ando iterated his “buy” rating on the company and increased a 12-month share price estimate to 380 yen from 362 yen, citing improvement in margins on air-freight forwarding.

“We expect it to generate greater profit growth than peers as it recoups its upfront costs, and cuts costs further,” Ando wrote in a report dated yesterday.

Trading companies declined after commodity prices plunged. Mitsubishi sank 0.6 percent to 2,089 yen. Mitsui & Co., which counts commodities as its biggest source of profit, slumped 1.3 percent to 1,298 yen and was the heaviest drag on the Topix. Mitsubishi Materials tumbled 4 percent, the most in the Nikkei 225. Dowa Holdings Co., which mines, refines and smelts various metal-related products, retreated 0.8 percent to 501 yen.

Metals, Oil Fall

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum plunged 6.3 percent yesterday, the biggest drop since May 4. Copper futures for March delivery tumbled 4.9 percent yesterday. Crude oil for December delivery dropped 3 percent yesterday in New York to $82.34 a barrel, the lowest settlement since Oct. 29.

“Investors are looking toward the economic slowdown that will likely follow tightening in emerging nations,” said Toyota Asset Management’s Hamasaki. “The market had priced in strong demand from emerging countries, but the view changed significantly in a short period of time.”

Companies that rely on revenue in China also declined. Komatsu dropped 0.5 percent to 2,226 yen. Hitachi Construction Machinery Co., the world’s biggest maker of giant excavators, slipped 0.2 percent to 1,870 yen.

Chinese Premier Wen Jiabao said on state television yesterday the cabinet is drafting measures to counter overly rapid price gains, suggesting intensified government efforts to combat the fastest inflation in two years.

“Pressure to sell stocks, mainly commodity-related shares, will increase,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “There are worries demand will decrease on China’s tightening policies.”

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.