Japan’s Nikkei 225 Rises to Highest Since April on BOJ

 Japanese stocks rose, with the benchmark equity gauge closing at the highest level in seven months, on speculation the opposition may win next month’s elections and press the central bank for more aggressive monetary easing.

Mitsubishi UFJ Financial Group Inc. and other lenders climbed as minutes of the Bank of Japan’s policy meeting showed it will continue with powerful monetary easing. Toyota Motor Corp., Asia’s biggest carmaker by market value that gets a quarter of its sales in North America, added 1.7 percent after U.S. consumer spending increased over the Thanksgiving weekend. Kansai Electric Power Co. and Kyushu Electric Power Co. paced gains among utilities on a report they will seek rate increases.

The Nikkei 225 Stock Average gained 0.2 percent to close at 9,388.94 in Tokyo, the highest since April 27. About two stocks rising for each that fell on the measure, which pared an advance of as much as 1.3 percent today. The gauge has gained 8.4 percent since Nov. 14, when Prime Minister Yoshihiko Noda called for a Dec. 16 election, triggering speculation the opposition may win and call for more monetary easing.

“The market continues to get support amid hopes for a political leadership change,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 5 trillion yen ($61 billion). “Expectations should push stocks until the election. We will see how the market will price in whether politicians can execute their pledges when the Diet starts a regular session next year.”

Volume Rises

Trading volume on the Nikkei was 19 percent above the 30-day average after Japan’s market reopened from a three-day weekend. The broader Topix Index advanced 0.4 percent to 779.50.

The Topix traded at 0.9 times book value as of last week, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.

The Bank of Japan should execute aggressive monetary easing, and the government should be involved in setting goals for monetary policy, Shinzo Abe, who heads the opposition Liberal Democratic Party, said on a TBS broadcast Nov. 24. Polls suggest Abe will probably become next premier after elections next month. His policy stance has helped the yen weaken to a seven-month low against the dollar.

Banks gained as minutes of the BOJ’s Oct. 30 meeting showed today that its members said the bank will continue with powerful monetary easing. Mitsubishi UFJ added 0.3 percent to 377 yen, and Mizuho Financial Group Inc., Japan’s third-largest lender by market value, rose 0.8 percent to 131 yen. Sumitomo Mitsui Financial Group Inc., the No. 2, added 0.5 percent to 2,588 yen.

Bullish Options

The cost of options to protect against losses in a fund tracking Japanese shares slipped, touching the lowest level in almost seven years on Nov. 16, on speculation a new government will enact stimulus and weaken the yen.

Puts protecting against a 10 percent drop in the iShares MSCI Japan Index exchange-traded fund on Nov. 16 cost 0.99 times more than calls betting on a 10 percent advance, according to data on three-month options compiled by Bloomberg. That’s the lowest level since Jan. 18, 2006.

Futures on the Standard & Poor’s 500 Index fell 0.5 percent today. The S&P 500 advanced 1.3 percent on Nov. 23. American shoppers spent 13 percent more during the four-day Thanksgiving weekend. Spending rose to $59.1 billion from Nov. 22 through Nov. 25 from $52.4 billion last year, the National Retail Federation said in a statement.

Exporters Rise

“The U.S. shopping season is starting on a positive note, but I’d like to see more data through at least the second week of December as you can’t grasp the whole trend yet,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about 1.79 trillion yen ($21.8 billion). “The Nikkei is rising toward 9,500 yen after breaking above the range since June,”

Exporters to the U.S. advanced, with Toyota rising 1.7 percent to 3,575 yen. Nissan Motor Co., Japan’s second largest carmaker by revenue, rose 2.3 percent to 806 yen.

Utilities gained the most among the Topix’s 33 industry groups after the Asahi newspaper reported Kansai Electric is seeking a 12 percent jump for household electricity rates and Kyushu Electric asked for an 8.5 percent increase. Kansai gained 5.3 percent to 754 yen, and Kyushu advanced 5.3 percent to 812 yen.

Renesas Electronics Corp. surged 17 percent to 337 yen after the Nikkei newspaper reported a government-backed fund will buy two-thirds of the unprofitable Japanese chipmaker.

Nipro Corp. jumped 9.5 percent to 622 yen after the maker of medical products said it has developed an automatic incubator for mass production of induced pluripotent and embryonic stem cells.

The Nikkei Stock Average Volatility Index rose 4.9 percent to 18.86, indicating traders expect a swing of about 5.4 percent on the benchmark gauge over the next 30 days.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE