Topix Gains Most in Week on Industrial Output, Earnings

Japanese stocks rose, with the Topix index capping its biggest gain in a week, as industrial production jumped the most since January and investors weighed earnings.

Omron Corp. soared 7.6 percent after the maker of electronic components increased its profit forecast and dividend and said it will repurchase shares. Nomura Holdings Inc. jumped 4.4 percent as Japan’s biggest brokerage announced a share buyback and its quarterly profit beat estimates. Koito Manufacturing Co., a maker of headlights for cars, surged 8.5 percent after raising its profit forecast.

The Topix increased 1.5 percent to 1,270.64 at the close in Tokyo, the most since Oct. 22, after the measure lost 0.2 percent yesterday. The Nikkei 225 Stock Average gained 1.5 percent to 15,553.91 today. A Federal Reserve policy announcement is due today while the Bank of Japan meets Oct. 31.

“The production data show that you don’t need to be that pessimistic about the outlook,” said Kenji Ueno, Tokyo-based senior investment manager at Sompo Japan Nipponkoa Asset Management Co. “I haven’t seen many companies cut their forecasts. Things don’t look bad. Japanese stocks are quick to rebound after falling fast recently.”

Industrial output increased 2.7 percent in September from August, the Trade Ministry said in Tokyo today, more than a median estimate of 2.2 percent in a Bloomberg News survey of economists. A report yesterday showed retail sales rose more than analysts expected in September.

Quarterly Earnings

Of the companies on the Topix that released quarterly results from the start of this month through yesterday and for which Bloomberg had estimates, 52 percent missed expectations for profit.

“Investors are expecting earnings to improve with the yen falling further,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. in Tokyo. “The U.S. economy is getting better and earnings are mostly good, and Japanese stocks remain relatively cheap.”

The Topix has rebounded 7.9 percent from an Oct. 17 low after entering a correction. The Topix traded at 1.2 times book value compared with 2.7 for the Standard & Poor’s 500 Index and 1.8 for the Stoxx Europe 600 Index.

Omron, Nomura

Omron soared 7.6 percent to 4,905 yen after increasing its full-year net income target 23 percent to 62.5 billion yen ($578 million). Its first-half dividend will be 31 yen per share, up from the previous guidance of 27 yen. The company also said it will buy back up to 1.36 percent of its shares for as much as 15 billion yen.

Nomura jumped 4.4 percent to 636.4 yen after net income climbed 39 percent in the second quarter from a year earlier to 52.9 billion yen, beating analysts’ estimates for 43 billion yen. Nomura will buy back as many as 40 million shares, 1 percent of its outstanding stock, from Nov. 13 to Jan. 16, the brokerage said yesterday.

Koito Manufacturing added 8.5 percent to 3,125 yen after raising its full-year net-income forecast 22 percent to 35 billion yen.

Hitachi Construction Machinery Co. added 3.9 percent to 2,152 yen after its first-half operating profit was 25.4 billion yen, exceeding analysts’ estimates for 22.4 billion yen.

The S&P 500 rose 1.2 percent yesterday as investors dissected U.S. earnings and economic data. Futures on the equity measure fell 0.2 percent today before the Fed’s announcement.

Fed Chair Janet Yellen and her colleagues are expected to focus on a robust U.S. economic outlook and end their bond-buying program as planned, according to economists surveyed by Bloomberg News. Most also expect Fed officials will reiterate interest rates will stay low for a “considerable time” and that there’s a “significant under-utilization of labor resources.”

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