Japanese Stocks Advance as Financials, Carmakers Rebound

Japan’s Topix index advanced the most in a month as brokerages, banks and consumer lenders rose after leading declines yesterday and carmakers climbed in the afternoon as the yen weakened.

Daiwa Securities Group Inc. jumped 12 percent, as a measure of brokerages in the Topix rebounded after falling more than 25 percent from a near five-year high in May. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, added 7.5 percent after dropping the most in a month yesterday. Toyota Motor Corp., the world’s largest carmaker, reversed declines to gain 2.1 percent. Wakita & Co. tumbled 11 percent after announcing a share sale.

The Topix climbed 2.6 percent to 1,125.47 at the close in Tokyo, its biggest increase since May 7, with more than two shares rising for each that fell. The measure dropped as much as 1.9 percent in morning trading. The gauge is down about 12 percent from an almost five-year high on May 22.

“There’s no rationality in the recent market crash,” said Tomomi Yamashita, a fund manager who helps oversee the equivalent of $5 billion at Shinkin Asset Management Co. in Tokyo. “After sharp drops there’s going to be a rebound with some bargain-hunting. Investors see the long-term trend is still for a weaker yen.”

The Nikkei 225 Stock Average climbed 2.1 percent to 13,533.76, with volume about 18 percent above the 30-day average at the close. Fast Retailing Co., the heaviest-weighted company on the equity benchmark, rose 1.1 percent. A gauge of option prices gained 1.1 percent to 37.81, indicating traders expect a swing of 11 percent for the Nikkei 225 in the next 30 days.

Market Swings

The Topix, Japan’s broadest equity measure, had an intraday trading range of 4.9 percent today and has swung by an average of 3.9 percent daily since May 23.

The Nikkei 225 and the Topix entered corrections on May 30 after dropping more than 10 percent from their highs. The Topix’s 14-day Relative Strength Index, which tracks the velocity of price changes, was at 35 yesterday, near the 30 threshold some traders see as a sign that stocks may be poised to rise.

“On a technical level the market has fallen too much, too quickly, and it wouldn’t be surprising if we saw a rebound in the near term,” said Toshihiko Matsuno, a strategist at SMBC Friend Securities Co. in Tokyo.

All but one of the Topix’s 33 industries increased today, led by brokerages, consumer lenders and banks. At the close yesterday eight of the groups had declined more than 20 percent from recent highs, according to data compiled by Bloomberg.

Billionaires’ Losses

Japan’s three richest men -- Fast Retailing Chairman Tadashi Yanai, SoftBank Corp. President Masayoshi Son and Rakuten Inc. Chief Executive Officer Hiroshi Mikitani -- lost a combined $4.2 billion on paper as shares dropped the past two weeks, according to data from the Bloomberg Billionaires Index.

Japan is still the best-performing major equity market this year, with the Topix and Nikkei 225 both up around 30 percent on optimism the nation can emerge from 15 years of deflation. The rally is being fuelled by earnings growth that is three times faster than the world average. Profits for the Topix will climb 57 percent to 74.78 yen a share in 2013, compared with the global average of 19 percent, according to more than 5,000 analyst forecasts compiled by Bloomberg.

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