Nikkei 225 Heads for Biggest Rise in Week on BOJ, Toyota

Japanese shares rose, with the Nikkei 225 Stock Average closing at the highest since September 2008, as Toyota Motor Corp. raised its profit forecast and the yen fell after Bank of Japan Governor Masaaki Shirakawa said he will step down ahead of schedule.

Toyota rose 6.1 percent. Mizuho Financial Group Inc. jumped 5.2 percent to pace gains among banks on speculation Shirakawa’s replacement will take further steps to end deflation. Kawasaki Kisen Kaisha Ltd. led shippers higher as the currency’s weakness boosted prospects for exports. Toyo Seikan Kaisha Ltd. soared 17 percent after raising its profit forecast.

The Nikkei 225 gained 3.8 percent to close at 11,463.75 in Tokyo, the highest since Sept. 29, 2008, two weeks Lehman Brothers Holdings Inc. filed for the biggest bankruptcy in U.S. history. Volume today was 48 percent above the 30-day average. The broader Topix Index advanced 3.1 percent to 968.82, with six stocks rising for each that fell.

“Many market participants think Shirakawa lacked a strategy to counter deflation and a strong yen,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 6 trillion yen ($64 billion). “That’s why stocks are rising with his departure coming earlier than expected.”

The Topix has surged 34 percent since elections were announced on Nov. 14 on optimism a new government will push for aggressive stimulus. The gauge is trading at 1.14 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.45 for the Stoxx Europe 600 Index.

Earnings Analysis

Of the 182 companies on the Topix that have reported earnings so far this quarter and for which Bloomberg has estimates, 62 percent have exceeded profit expectations. Some 53 percent missed sales projections, the data show.

Toyota jumped 6.1 percent to 4,815 yen, the highest close since Sept. 22, 2008. Japan’s biggest manufacturer raised its forecast for net income in the year ending March by 10 percent to 860 billion yen.

Toyo Seikan Kaisha, a maker of packaging products, soared 17 percent to 1,321 yen, capping the biggest daily advance since 1999, after raising its net income forecast by 60 percent.

Mitsubishi Heavy Industries Ltd. soared 10 percent to 533 yen, the highest since Sept. 3, 2008. Tatsuhiko Nojima, an executive vice president for the Japanese heavy equipment maker, said today it aims to turn a profit on Boeing Co.’s 787 Dreamliner production. Nojima said Mitsubishi Heavy sees no impact on the manufacturing timetable after the planes were grounded due to battery problems.

Shirakawa Departure

Shirakawa, 63, will step down two weeks early on March 19, the same day as two deputy governors, he told reporters in Tokyo yesterday. The transition is expected to help Abe’s campaign for easing. The yen today touched the lowest level against the dollar since May 2010 and the weakest since April 2010 versus the euro.

“The market expects the next BOJ head and deputy governors to be supportive of monetary easing,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “An earlier transition will keep up optimism for a weaker yen and an end to deflation.”

Shippers gained as the yen dropped. Nippon Yusen K.K. jumped 5.6 percent to 227 yen. Mitsui O.S.K. Lines Ltd. rose 5.9 percent to 324 yen. Kawasaki Kisen advanced 9.6 percent to 183 yen.

Mizuho advanced 5.2 percent to 202 yen and Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, added 2.5 percent to 533 yen.

Futures on the S&P 500 gained 0.1 percent today. The gauge added 1 percent yesterday, as earnings topped forecasts and Dell Inc. agreed to be taken private in the largest leveraged buyout since the financial crisis.

Kao Corp., a maker of household products, jumped 7.8 percent to 2,782 yen after announcing a share buyback.

The Nikkei Stock Average Volatility Index added 4.2 percent to 24.96, indicating traders expect a swing of about 7.2 percent on the benchmark gauge over the next 30 days.

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