Japan’s Topix Gains Most in Two Months as Railway Shares Advance

Japanese shares rose, with the Topix index capping its biggest rally since February, as rail companies and tiremakers advanced.

East Japan Railway Co. jumped 3.9 percent, climbing for a second day after dropping 8.5 percent in the last four days of March. Toyo Tire & Rubber Co. surged 6.9 percent, the most since November. Sony Corp. added 3.1 percent after saying it will halve its holding in Olympus Corp., which fell 4.1 percent. Nippon Steel & Sumitomo Metal Corp. dropped 1.3 percent after a report it will cut production this quarter.

The Topix added 1.7 percent to 1,554.17 at the close of trading in Tokyo, its largest advance since Feb. 4. The Nikkei 225 Stock Average gained 1.5 percent to 19,312.79. The yen strengthened 0.2 percent to 119.54 per dollar.

“Investors who used to buy bonds are shifting into equities,” said Osamu Koizumi, Tokyo-based executive officer at Meiji Yasuda Asset Management Co. “Some investors are unable to buy bonds that are only yielding 0.3 percent. The economy isn’t accelerating, but it’s not contracting either. It’s hard to imagine it will contract.”

Japan’s benchmark gauge has climbed 10 percent this year, the best performance among developed Asian stock markets, as buying by the central bank and the nation’s $1.1 trillion pension fund buoyed shares. Japan Post Holdings Co., the state-owned mail, banking and insurance giant, will increase investments in riskier assets including equities, the Nikkei newspaper reported yesterday.

Equities Managers

Japan’s public pension fund, the world’s largest, hired three managers to help it shift money from local bonds into stocks and foreign investments. The Government Pension Investment Fund named BlackRock Japan Co. and Nomura Asset Management Co. as transition managers for domestic equities, according to a statement today.

“Japanese stocks are going to remain supported by more pension funds increasing investments into equities,” Bernard Aw, Singapore-based market strategist at IG Ltd., said by phone. “I’m still bullish.”

Tiremakers and rubber producers led gains. Toyo Tire added 6.9 percent to 2,331 yen. Bridgestone Corp. rose 2.9 percent to 4,891 yen.

Railway stocks also gained. East Japan Railway climbed 3.9 percent to 10,155 yen, while Central Japan Railway Co. rose 3.2 percent to 22,570 yen.

Sony jumped 3.1 percent to 3,336 yen after saying it would book a profit of 46.8 billion yen ($392 million) after selling part of its stake in Olympus to JPMorgan Chase & Co. to fund strategic investments. Olympus fell 4.1 percent to 4,240 yen.

Shareholder Payouts

Canon Inc. advanced 3.2 percent to 4,310 yen. Citigroup Inc. raised its rating on the stock to buy from neutral, citing expectations of higher shareholder payouts and the recent purchase of a Swedish surveillance camera maker.

Nippon Steel & Sumitomo Metal dropped 1.3 percent to 294.8 yen after the Nikkei newspaper reported the company will cut crude steel production by 10 percent in the quarter ending June from the previous three months.

E-mini futures on the Standard & Poor’s 500 Index fell 0.3 percent after the underlying gauge slipped 0.4 percent on Wednesday amid weaker-than-estimated data on hiring and manufacturing.

Concern economic growth may stall also weighed on Japanese shares this week, with the Topix sliding 0.9 percent Wednesday after the Bank of Japan’s Tankan survey revealed that large manufacturers expect business conditions to weaken this quarter, and most companies plan to pare investment in the year ahead.

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