Japan’s Topix Index Rebounds From Six-Week Low on Yen

Japanese stocks rose, with the Topix index rebounding from a six-week low, as the yen held losses against the dollar and investors weighed sanctions imposed on Russia after Crimea’s referendum.

Mazda Motor Corp., an automaker that gets 30 percent of its sales in North America, gained 2 percent. Dentsu Inc. jumped 5.5 percent after Bank of America Corp.’s Merrill Lynch unit said the advertising company was one of its top picks in the industry. Mitsubishi Electric Corp. gained 3.1 percent after the manufacturer of electronic equipment forecast a higher dividend. SoftBank Corp. rose 3.2 percent, extending yesterday’s 4.9 percent advance.

The Topix advanced 1 percent to 1,165.94 at the close in Tokyo, with all 33 industry groups rising. The measure gained for the first time in five days after yesterday closing at its lowest since Feb. 4. The Nikkei 225 Stock Average today added 0.9 percent to 14,411.27.

“The market is taking a breather after the sanctions weren’t as harsh as expected,” said Osamu Koizumi, Tokyo-based executive officer at Meiji Yasuda Asset Management Co., which oversees the equivalent of 1.75 trillion yen ($17 billion) in assets. “Shares are being bought back after falling too much.”

Russian stocks and the ruble rallied yesterday even as the U.S. and European Union ramped up sanctions after Crimea’s referendum. U.S. equities advanced after data from the Federal Reserve showed factory production rose by the most in six months in February.

Japan’s currency was little changed against the greenback today after falling 0.4 percent yesterday. Mazda added 2 percent to 460 yen. Nissan Motor Co., a carmaker that generates about 34 percent of its revenue out of North America, rose 2.2 percent to 869 yen.

Relative Value

The Topix traded at 1.14 times book value, down from 1.32 at the end of last year. That compares with 2.6 for the Standard & Poor’s 500 Index and 1.83 for the Stoxx Europe 600 Index yesterday.

EU foreign ministers agreed to freeze assets and impose visa travel bans on 21 Russian and Crimean political figures, while U.S. President Barack Obama’s administration put similar sanctions on seven Russian government officials and four Ukrainians including ousted President Viktor Yanukovych. Putin responded by recognizing Crimea as a sovereign state.

Futures on the S&P 500 rose 0.2 percent today. The equity measure increased 1 percent yesterday on a report factory production in the U.S. rose last month, indicating the industry started to recover from severe winter weather.

Factory Production

The 0.8 percent gain in industrial output exceeded the highest estimate in a Bloomberg survey and followed a revised 0.9 percent slump in January, figures from the Federal Reserve showed. The central banks begins a two-day meeting today that analysts said will see policy makers further scale back bond-purchase stimulus.

A gauge tracking information and communication shares contributed the most to the Topix’s advance today. SoftBank climbed 3.2 percent to 8,372 yen. Nippon Telegraph & Telephone Corp. added 2 percent to 5,730 yen. SoftBank, which holds a stake in Alibaba Group Holding Ltd., surged 4.9 percent yesterday after China’s biggest e-commerce company started the process to list shares in the U.S.

Dentsu soared 5.5 percent to 3,850 yen after its rating was raised to buy from neutral at Bank of America Merrill Lynch. Mitsubishi Electric gained 3.1 percent to 1,147 yen after raising its planned year-end dividend to 11 yen from 6 yen a year earlier.

Worst Performer

The Topix dropped 10 percent this year, the most among 24 developed-market gauges, ahead of a planned increase in the nation’s sales tax next month. Short-selling of shares on the Tokyo Stock Exchange reached 36 percent of total trading value yesterday, the highest since Oct. 16, 2008, when data became available.

Economists are split over how long Japan’s government has to rein in the world’s biggest debt burden, a Bloomberg News survey shows, adding to a debate on whether the government should keep ratcheting up the sales levy. The lack of consensus offers an opening to opponents of a 2 percentage point increase in the sales tax, due next year after the planned 3 point jump to 8 percent in April.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE