Topix Posts Longest Winning Streak in Nearly Five Years

Japanese shares gained, with the Topix index rising for a tenth day, its longest winning streak since August 2009, as the yen weakened and steelmakers advanced.

Nippon Steel & Sumitomo Metal Corp. climbed 3.8 percent after Credit Suisse Group AG raised its rating on Japan’s largest steel manufacturer. Dai-ichi Life Insurance Co. climbed 3.6 percent after confirming reports that it will buy U.S.-based Protective Life Corp. Adways Inc. surged 13 percent after a report the Internet ad company’s partner, Line Corp., is preparing an initial public offering.

The Topix rose 0.4 percent to 1,233.95 at the close of trading in Tokyo after falling as much as 0.1 percent. About three shares rose for every two that fell. The gauge posted its longest winning streak since the 13 days through Aug. 4, 2009. The Nikkei 225 Stock Average added 0.2 percent today to 15,067.96.

“The future is looking brighter for Japanese shares,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc., citing factors such as a weaker yen and the relative cheapness of stock prices. “However, the danger of overheating is increasing. The Nikkei 225 is likely to trade in a range between 14,950 and 15,150.”

The Tokyo Stock Exchange Mothers Index of smaller companies dropped 0.8 percent after posting its longest stretch of daily advances on record. The yen slid 0.2 percent to 102.69 per dollar, set for a third day of declines.

Overheating Signs

The Topix’s 14-day Relative Strength Index rose to 70.47 today, the highest since Dec. 30 when the measure closed at a 5 1/2-year peak. A reading above 70 indicates to some traders that shares have risen too far, too fast.

The 25-day Toraku Index, which compares the numbers of advancing and declining stocks on the Topix, reached 119.09 yesterday. A level above 120 signals that shares may be poised to fall, according to SMBC Nikko Securities.

Nippon Steel climbed 3.8 percent to 302 yen. Credit Suisse raised its rating on the stock to outperform from neutral on three buy signals; potential rebound of the domestic inventory cycle; recovering spreads between raw material prices and steel product prices; and signs the shares are oversold.

Dai-ichi Life advanced 3.6 percent to 1,499 yen. The insurer will buy U.S. Protective Life for about 582.2 billion yen ($5.7 billion), the company said today, confirming media reports from earlier this week.

Dai-ichi Life will sell up to 250 billion yen of shares to fund the acquisition, according to a separate filing by the insurer. The amount is similar to market expectations and there are no big risks to the share price, Credit Suisse said in a report.

Line IPO

Adways, which has an advertising tie-up with Line, surged 13 percent to 2,031 yen. Netyear Group Corp., a marketing consulting which also has an alliance with Line, soared 20 percent to 2,103 yen. Mobile-messaging service Line is working with Nomura Holdings Inc. and Morgan Stanley to prepare for an IPO as soon as November, people with knowledge of the matter said.

Monetary easing and government spending drove a world-beating 51 percent jump for the Topix in 2013. The index fell 5.3 percent this year, the most among 24 developed markets tracked by Bloomberg, amid concern the measures won’t be enough to revive the economy.

The gauge traded at 1.20 times book value today compared with 2.68 for the S&P 500 and about 1.90 for the Stoxx Europe 600 Index yesterday. Volume on the Topix was about 9.5 percent higher than the 30-day average today.

“I think the market as a whole is cheap,” said Seiichiro Iwamoto, who helps oversee the equivalent of $33 billion at Mizuho Asset Management Co.“Fundamentally I think the market will continue to go up this year.”

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