Japan Stocks Rise After Yellen Speech as Investors Eye Dividends

Japanese stocks rose after Federal Reserve Chair Janet Yellen said the U.S. central bank was on track to raise interest rates in 2015 and investors picked up shares ahead of a deadline to receive the next dividend payment.

MS&AD Insurance Group Holdings Inc., which goes ex-dividend on Monday, rose 4.1 percent. Kansai Electric Power Co. surged 9.6 percent after Nomura Holdings Inc. lifted its rating on the utility. Japan Tobacco Inc. added 3.9 percent after people familiar with the matter said that the company was in talks to buy cigarette assets from Reynolds America Inc. Sharp Corp. slumped 5.8 percent after the struggling electronics maker said it will miss its operating profit forecast for the first half.

The Topix rose 1.9 percent to 1,453.81 at the close in Tokyo, its biggest gain since Sept. 9. The measure fell 0.6 percent in a holiday-shortened week. The Nikkei 225 Stock Average added 1.8 percent to 17,880.51. The yen weakened 0.3 percent to 120.46 per dollar after Yellen said she expects to raise borrowing costs this year, while acknowledging that economic “surprises” could lead policy makers to change that plan.

“The yen has recovered back above 120 and we’re witnessing public money flowing in to pick up dividends ahead of the quarter end,” said Shun Maruyama, chief equity strategist at BNP Paribas SA. When the Nikkei 225 approaches “the 17,700 yen level, we tend to see supportive buying from public pensions.”

Dividend Deadline

More than half of the 1,887 stocks in the Topix trade ex-dividend from Monday, data compiled by Bloomberg show. The group includes Toyota Motor Corp., Mitsubishi UFJ Financial Group Inc. and Nippon Telegraph & Telephone Corp. That means Friday was the last chance for investors to buy shares if they wanted to receive the payouts.

MS&AD Insurance climbed 4.1 percent. Sumitomo Mitsui Financial Group Inc., which trades with an indicated annual dividend yield of 3.18 percent, rose 3.6 percent.

Financial shares were also buoyed by the timeline outlined by Yellen, who spoke a week after the Fed left its benchmark rate near zero amid concern about the global growth outlook and turmoil in financial markets.

“Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” she said during a speech Thursday in Amherst, Massachusetts. “But if the economy surprises us, our judgments about appropriate monetary policy will change.”

Yellen’s comments soothed concern about whether the U.S. economy was strong enough to withstand a rate increase, according to Murayama.

New Arrows

Prime Minister Shinzo Abe on Thursday unveiled a new economic growth target and vowed to halt Japan’s population slide, as he seeks to claw back support after the passage of unpopular defense bills. He pledged to introduce policies that would make it easier for young people to marry and plan families, while also vowing to tackle child poverty and reduce to zero the number of people forced to leave their jobs because of the demands of caring for elderly relatives.

Providers of day-care services for children and the elderly jumped after Abe’s remarks. JP-Holdings Inc. climbed 9.9 percent, while Cedar Co. rose 7.1 percent.

Utilities posted the second-biggest gain among the Topix’s 33 industry groups after Nomura upgraded Kansai Electric. The brokerage said electricity rate hikes are expected to boost profits for the industry. Tokyo Electric Power Co. advanced 3.5 percent.

Japan Tobacco

Japan Tobacco climbed 3.9 percent after people familiar with the matter said the company is seeking to expand outside of its shrinking domestic market by buying assets from Reynolds.

Sharp dropped 5.8 percent after saying it expected to miss its operating profit forecast for the first half. Shares of the Apple Inc. supplier pared losses after people familiar with the plan said the company is nearing a deal with Foxconn Technology Group to sell a stake in its liquid-crystal display business.

Inflation Target

Japan’s consumer prices excluding fresh food fell 0.1 percent in August from a year earlier, the statistics bureau said Friday. That was in line with analyst estimates. The Bank of Japan expects inflation to reach its 2 percent goal around the six months through September 2016, Governor Haruhiko Kuroda said earlier this month when monetary policy was left unchanged.

E-mini futures on the Standard & Poor’s 500 Index rose 0.6 percent. The underlying measure lost 0.3 percent on Thursday before Yellen’s speech. Industrial shares slid after Caterpillar Inc. said it reduced its sales forecast and cut jobs in response to a slowdown in the mining and energy industries.

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