Japan Shares Rise to One-Month High on Tokyo Olympics WinAnna Kitanaka and Satoshi Kawano
Japanese shares rose, with the Topix index closing at its highest in a month, after Tokyo won its bid to host the 2020 Olympics and data showed the economy grew more than initially estimated in the second quarter.
Developers and construction stocks led gains as all but one of the 33 Topix industry groups climbed. Taisei Corp., a building contractor expected to benefit from Tokyo’s selection, surged 14 percent for the biggest advance on the Nikkei 225 Stock Average. Dentsu Inc., which has broadcast rights for the games in Asia, jumped 7.4 percent. Sportswear maker Mizuno Corp. soared 11 percent. Nintendo Co. tumbled 8.4 percent after the video-game developer wasn’t added to the Nikkei 225.
The Topix increased 2.2 percent to 1,173 at the close of trading in Tokyo, its highest since Aug. 6. Volume was about 40 percent above the 30-day average. The Nikkei 225 climbed 2.5 percent to 14,205.23 yen, with just three companies falling.
“With Tokyo winning the Olympic bid, the market is feeling very celebratory,” said Ichiro Yamada, general manager of equities who helps oversee the equivalent of $3.1 billion at Fukoku Mutual Life Insurance Co. “While it will help the economy on a micro level, it also raises the presence of Japan and, in the short term at least, boosts the mood of investors.”
Tokyo outpolled Istanbul 60-36 in a runoff vote among members of the International Olympic Committee meeting in Buenos Aires over the weekend. The yen weakened after the announcement, falling to as low as 100.11 against the dollar today.
Hosting the 2020 Olympics may boost construction and tourism and lift consumer confidence. The economic effect from the games would be approximately 3 trillion yen ($30 billion) for Japan, according to the Tokyo 2020 Bid Committee’s website.
The Topix Real Estate Index and the Topix Construction Index each surged at least 4.5 percent. Taisei, which gets all sales domestically, advanced 14 percent to 463 yen, its highest level in 6 1/2 years. Kajima Corp., another builder, soared 9.7 percent to 396 yen, the highest since June 2008. Mitsui Fudosan Co., Japan’s biggest developer, gained 6.4 percent to 3,430 yen.
Dentsu, the country’s largest advertising agency, surged 7.4 percent to 3,500 yen. Mizuno soared 11 percent to 606 yen, the most since May 17.
Fujita Kanko Inc., an operator of hotels and resorts, jumped 12 percent to 461 yen. Japan Air Terminal, which manages facilities at Tokyo’s Haneda and Narita airfields, climbed 8.4 percent to 1,997 yen. Japan Bridge Corp. soared 14 percent to 198 yen.
“Winning the Olympic bid is boosting the mood of investors,” said Toshiyuki Kanayama, senior market analyst at Tokyo-based Monex Inc. “There’s expectations it’s going to support Japan’s economic recovery as a fourth arrow to Abenomics. Along with the Olympic news, the gain in the country’s GDP is going to be an added catalyst.”
Japan’s gross domestic product rose an annualized 3.8 percent in the second quarter from the three months through March, revised from an original estimate of 2.6 percent. The median forecast of economists surveyed by Bloomberg was for a 3.9 percent gain.
Futures on the Standard & Poor’s 500 Index climbed 0.3 percent. The measure was little changed in New York on Sept. 6, as investors weighed tensions over Syria and slower-than forecast jobs growth that eased concern about cuts in stimulus.
Employers in the U.S. added 169,000 workers last month, missing the median forecast of 180,000 in a Bloomberg survey of 96 economists. The unemployment rate unexpectedly fell to 7.3 percent as more people left the labor force.
Nintendo dropped 8.4 percent to 10,860 yen, leading a decline by the Topix Other Products Index, the only industry group to fall on the broader gauge. Some investors expected the company to be added to the Nikkei 225 after shifting its main listing from Osaka to Tokyo on the merger of the cash-equities platforms of the Tokyo and Osaka stock exchanges.
Nikkei Inc., which compiles the Nikkei 225, said on Sept. 6 it will add Nitto Denko Corp. and Tokyu Fudosan Holdings Corp. to the measure. The changes to the gauge are the first since the bourse combination. Nitto Denko surged 9.7 percent to 6,240 yen.
Among other stocks that fell, Sumco Corp. plunged 17 percent to 734 yen, the biggest drop in more than 4 1/2 years and the most on the Nikkei 225 today. The maker of silicon wafers for semiconductors on Sept. 6 lowered its net-income forecast for February to December to 500 million yen from 10 billion yen.
The Topix traded at 1.22 times book value today, compared with 2.43 for the S&P 500 and 1.72 for the Stoxx Europe 600 Index on Sept. 6. The Japanese measure’s 30-day historic volatility was at 25.18 today, compared with its five-year median of 19.42.