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Japan’s Topix Rises on Report GPIF to Buy More Stocks

Japan’s Topix index rose, reversing earlier losses, after a report the nation’s biggest pension fund plans to boost its domestic stock holdings by more than analysts had expected.

The Topix added 0.6 percent to 1,258.12 at the close in Tokyo, after sliding as much as 0.7 percent. The gauge fell 3.2 percent in the five days through yesterday. The 126.6 trillion yen ($1.2 trillion) Government Pension Investment Fund plans to increase its target for local equities to more than 20 percent from the current 12 percent, Reuters reported, citing unidentified government and ruling-party officials. Analysts and investors had expected an increase to 20 percent, according to a Bloomberg News survey in May.

“I’m not sure how much beyond 20 percent they may go for stocks, but it’s positive news and came when the market was looking for a catalyst,” said Takuya Takahashi, a senior strategist at Daiwa Securities Group Inc. “The market is reacting strongly because it’s fallen a lot. Everyone was ready to jump on good news because the fundamentals aren’t bad.”

Meiji Holdings Co., a maker of dairy products, soared 12 percent after reporting net income rose. Fujifilm Holdings Corp. jumped 5.4 percent after the U.S. government said it is in talks to get the company’s experimental flu drug approved to treat Ebola. Mitsui Fudosan Co., the nation’s largest real-estate company, sank 1.3 percent after reporting lower quarterly profit.

GPIF will pare local bond holdings to about 40 percent and may put more money in global stocks, according to the Reuters report. The yen fell 0.3 percent to 102.38 per dollar. The fund hasn’t made any decisions on its new core portfolio, GPIF President Takahiro Mitani said by phone today when asked to comment on the report.

GPIF Report

GPIF has started a serious review of its portfolio, Shigehito Aoki, an official at the fund, said at a briefing last month as it reported an 8.6 percent return in the year through March, buoyed by an equity rally in the first three quarters. The asset review will probably be done in autumn, Yasuhiro Yonezawa, who heads GPIF’s investment committee, said in July.

More than 380 companies on the Topix report results today and tomorrow, according to data compiled by Bloomberg. Of the businesses on the gauge that released quarterly results from the beginning of July through yesterday and for which Bloomberg had estimates, 58 percent beat earnings expectations.

Meiji, Fujifilm

Meiji soared 12 percent to 8,340 yen, its biggest advance since listing in 2009 and a record high, after reporting its quarterly net income rose 13 percent to 7.4 billion yen and operating profit gained 14 percent to 10.7 billion yen from the previous year.

Fujifilm jumped 5.4 percent to 3,089.5 yen. Its U.S. partner MediVector Inc. in Boston is in talks with the Food and Drug Administration to submit an application to begin using Fujifilm’s drug in humans for Ebola, according to Department of Defense spokeswoman Amy Derrick-Frost.

Mitsui Fudosan slid 1.3 percent to 3,268.5 yen after saying its quarterly net income fell 6.2 percent to 15.7 billion yen from a year ago.

DeNA Co., a mobile game and social-media service, plunged 7.1 percent to 1,211 yen after saying it expects first-half net income to slump 64 percent to 6.6 billion yen from a year earlier.

The Topix rebounded 9.4 percent from a May 21 low on signs the economy is weathering an April sales-tax increase and amid that buying by GPIF will bolster demand for stocks. The Bank of Japan started a two-day policy meeting today.

The Topix traded at 1.2 times book value today, compared with 2.6 for the S&P 500 and 1.8 for the Stoxx Europe 600 Index.

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