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Topix Rises to 3-Week High as Yen Falls on Fed Minutes

Aug. 21 (Bloomberg) -- Japan’s Topix index rose to a three-week high after the yen fell the most in five months yesterday and as investors weighed Federal Reserve minutes.

Honda Motor Co., a carmaker that gets nearly half its revenue in North America, climbed 2.3 percent. Mazda Motor Corp. increased 2.8 percent on a report the automaker is on track to become debt free in the year ending March 2017 as cash flow improves. Dainippon Screen Manufacturing Co. jumped 3.4 percent after the semiconductor-equipment maker was upgraded at Mitsubishi UFJ Morgan Stanley Securities Co.

The Topix advanced 0.9 percent to 1,291.19 in Tokyo, the highest close since July 30. All but two of its 33 industry groups climbed. The Nikkei 225 Stock Average added 0.9 percent to 15,586.20. The yen fell 0.1 percent to 103.86 per dollar after sliding 0.8 percent yesterday, the most since March 19.

“A weaker yen is certainly benefiting Japanese stocks,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 4.9 trillion yen ($47 billion). “The Fed is in no hurry to raise rates as inflation remains slow and geopolitical risks linger.”

Futures on the Standard & Poor’s 500 Index were little changed today. The equity measure rose 0.3 percent yesterday to within two points of a record.

Fed officials raised the possibility that they may end aggressive stimulus sooner than anticipated while acknowledging continued slack in the jobs market. Weak wage growth and low inflation have provided room to hold rates near zero even as growth shows signs of accelerating. The Fed is on pace to end its monthly bond purchases in October, and plans to keep rates low for a “considerable time” after that.

The release of the minutes set the stage for Fed Chair Janet Yellen’s speech on labor markets tomorrow at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming.

Honda, Komatsu

Exporters gained as the yen extended yesterday’s loss. Honda added 2.3 percent to 3,579.5 yen. Komatsu Ltd., a construction machinery maker that gets about 30 percent of its revenue in the Americas, rose 0.8 percent to 2,369 yen.

Brokerages and consumer lenders led gains on the Topix. Nomura Holdings Inc., Japan’s biggest securities company, advanced 4.3 percent to 667.2 yen and consumer lender Aiful Corp. soared 8.2 percent to 462 yen.

Mazda rose 2.8 percent to 2,487 yen after the Nikkei newspaper reported the company plans to become debt free in the year ending March 2017 by repaying liabilities with increased cash inflows.

Dainippon Screen

Dainippon Screen jumped 3.4 percent to 577 yen after its rating was raised to outperform from neutral at Mitsubishi UFJ Morgan Stanley Securities.

Konica Minolta Inc. added 3.6 percent to 1,184 yen after Goldman Sachs Group Inc. added the office-equipment maker to its conviction list.

The Topix rebounded 14 percent from this year’s low on April 14 amid optimism about the global economy and speculation Japan’s $1.2 trillion Government Pension Investment Fund will buy more domestic shares. The Topix traded at 1.2 times book value at the close, compared with 2.7 for the S&P 500 and 1.8 for the Stoxx Europe 600 Index yesterday.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Yuko Takeo in Tokyo at ytakeo2@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim Powell

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