Japan Shares Gain as Yen Drops to 4-Year Low After G-20

Japanese shares gained, with the Nikkei 225 Stock Average closing at its highest since 2008, as the yen traded near a four-year low after the Group of 20 nations refrained from opposing Bank of Japan stimulus policies.

Toyota Motor Corp., the world’s biggest carmaker, gained 1.3 percent. Mitsui Engineering & Shipbuilding Co. surged 13 percent after the Nikkei newspaper reported the company is in talks to merge with Kawasaki Heavy Industries Ltd. Bearing maker JTEKT Corp. jumped 11 percent after saying profit may be quadruple its forecast. Net One Systems Co. dropped 1.2 percent after the computer systems’ operator reported preliminary net income 38 percent below forecast.

The Nikkei 225 rose 1.9 percent to close at 13,568.37 in Tokyo, its highest since July 2008. The Topix Index added 1.7 percent to 1,145.60. All but two of its 33 industry groups advanced.

“The stock market is obediently reacting to the weaker yen after the G-20 approved of Japan’s monetary easing measures,” said Koichi Kurose, chief market strategist at Resona Bank Ltd. in Tokyo. “Going forward it’s hard to expect much positive surprise from the Bank of Japan and government, and the pace of gains may slow down. However, the weaker yen, stronger stocks trend is likely to continue until mid-May.”

The Topix has climbed 59 percent since mid-November as Prime Minister Shinzo Abe and central bank Governor Haruhiko Kuroda pledged to defeat 15 years of deflation. The gauge traded at 1.3 times book value compared with 2.3 for the Standard & Poor’s 500 Index and 1.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

G-20 Meet

The yen dropped to 99.74 per dollar, near its weakest level since April 2009. Although the G-20 reiterated a February vow to avoid “competitive devaluation,” it didn’t single Japan out for criticism and said the central bank’s plan to double its monetary base is “intended to stop deflation and support domestic demand.”

Bank of Japan Governor Haruhiko Kuroda emerged from the talks saying he was emboldened to press ahead with his campaign to defeat 15 years of deflation.

Toyota, which gets a quarter of its revenue from North America, gained 1.3 percent to 5,550 yen. Honda Motor Co., which gets about 80 percent of its sales from outside Japan, rose 1.7 percent to 3,915 yen. Canon Inc., the world’s largest camera-maker, climbed 1.8 percent to 3,780 yen.

The Next Focus

“There were no negative surprises from the G-20 meeting and it all ended peacefully, leading to a weaker yen and gains in shares,” said Seiichiro Iwamoto, who helps oversee about $33 billion at Mizuho Asset Management Co. “The next focus will be on earnings and whether the weaker yen is helping manufacturers.”

JTEKT jumped 11 percent to 946 yen, its biggest gain since March 2011. The company reported net income of 13.5 billion yen for the previous fiscal year in a preliminary earnings statement, compared with a forecast of 4 billion yen.

Net One sank 1.2 percent to 828 yen. The company reported 4.3 billion yen in profit for the year ended March 31 in a preliminary earnings statement, missing its forecast of 6.9 billion yen.

Mitsui Engineering surged 13 percent to post the biggest gain on the Nikkei 225. Kawasaki Heavy fell 0.9 percent, reversing a gain of as much as 3.6 percent. The companies are planning to hold merger talks to create Japan’s second-biggest heavy machinery maker, according to the Nikkei newspaper.

The Nikkei Stock Average Volatility Index gained 2.2 percent to 25.79 today, indicating traders expect a swing of about 7.4 percent on the benchmark gauge over the next 30 days. Volume on the measure was 6.2 percent lower than its 30-day average at the close.

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