Japan’s Topix Index Posts Biggest Monthly Gain This Year

Japanese stocks rose, with the Topix index posting its biggest monthly advance since November, led by a surge among consumer finance companies.

Acom Co. surged 16 percent after Jiji reported the government drafted a review of consumer finance regulations with an aim to let approved lenders charge higher interest rates. Nippon Paper Industries Co. climbed 1.2 percent after the Nikkei newspaper reported first-quarter operating profit may jump 60 percent. Fujimi Inc. gained 4.7 percent, leading a rally among glass and ceramics producers. Tokai Carbon Co. led declines on the Nikkei 225 Stock Average after lowering its full-year profit projection.

The Topix gained 0.8 percent to 1,262.56 at the close in Tokyo, bringing its June advance to 5.1 percent. The Nikkei 225 Stock Average added 0.4 percent today to 15,162.10. The yen gained 0.1 percent to 101.31 per dollar after touching the strongest level since May 21.

“As long as we are still faced with that power of zero interest rates I doubt that the equities bull market is about to terminate,” Lim Say Boon, Singapore-based chief investment officer at the private banking unit of DBS Group, Southeast Asia’s largest lender by market value, told Bloomberg TV. “The alternatives to being in risk assets are zero.”

The Topix fell 3.1 percent this year, the steepest decline among 24 developed markets tracked by Bloomberg, following a world-beating 51 percent surge in 2013. The 25-day Toraku Index, which compares the numbers of advancing and declining stocks on the Topix, last week touched 164, its highest level since December 2012, signaling to some investors that shares have climbed too far, too fast.

Industrial Production

Japanese industrial production increased 0.5 percent in May from the prior month, a preliminary government report showed today. While that missed the 0.9 percent median growth estimate of 28 economists surveyed by Bloomberg, it showed production rebounding from a 2.8 percent slump in April. The Tankan survey of sentiment among large manufacturers is due tomorrow.

The Topix traded at 1.2 times book value, compared with 2.7 for the Standard & Poor’s 500 Index and 1.9 for the Stoxx Europe 600 Index yesterday.

Futures on the S&P 500 were little changed today. The gauge is one trading day away from completing the longest stretch of quarterly gains in 16 years, as central bank stimulus and confidence in economic growth sent U.S. stocks to all-time highs.

Consumer-finance firms surged after the Jiji report. Acom gained 16 percent to 482 yen, while Aiful Corp. surged 11 percent to 653 yen. Orient Corp. gained 3.8 percent to 273 yen.

Nippon Paper gained 1.2 percent to 1,906 yen. Operating profit for the first quarter is likely to be about 6.5 billion yen ($64 million), the Nikkei reported without saying where it got the information. The firm is likely to maintain its full-year forecast of 40 billion yen, according to the report.

A gauge of glass and ceramics makers on the Topix jumped 1.7 percent. Fujimi gained 4.7 percent to 1,423 yen and Nichias Corp. advanced 3.9 percent to 699 yen.

Digital Garage Inc. added 7.8 percent to 1,662 yen after the Internet marketing firm reported full-year net income of 2.75 billion yen, topping the company’s forecast of 2.1 billion yen.

Tokai Carbon lost 2 percent to 289 yen after cutting its yearly profit projection 22 percent.

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