Japanese Shares Rise With Topix Capping Fourth Year of Gains

  • Topix is up 9.7 percent for quarter, rises 9.9 percent in 2015
  • Japanese shares aren't expensive, Shinkin's Yamashita says

Japanese shares rose, with the Topix index ending the year with its fourth straight annual gain, as equities tracked a rally in the U.S. and Europe.

The Topix rose 0.3 percent to 1,547.30 at the close in Tokyo for the final trading day of 2015. That brings the measure’s annual advance to 9.9 percent, extending a 93 percent climb over the past three years. Trading volume was 24 percent below the 30-day average. The gauge rose for a third straight day, giving it a 9.7 percent increase for the quarter. The Nikkei 225 Stock Average added 0.3 percent to 19,033.71. The yen traded at 120.38 per dollar, up less than 0.1 percent.

The Standard & Poor’s 500 Index jumped 1.1 percent on Tuesday to restore its gain for the year and nearly erase a monthly decline as retailers and technology shares led a rally in light trading. The Stoxx Europe 600 Index climbed 1.4 percent.

“The currency is stable and global shares, including the U.S. and Asia, rose, which is supporting the rebound in Japan,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co., which oversees $6.3 billion. “Going into next year, Japan’s economy looks good. Earnings are growing and the stock market isn’t too expensive.”

Bridgestone, Toshiba

Bridgestone Corp. added 0.4 percent after the tiremaker backed down from a bidding war with billionaire investor Carl Icahn over auto-parts retail chain Pep Boys. Toshiba Corp. gained 7.7 percent, extending this week’s rally, after saying it’s seeking a second credit line from banks and following last week’s 23 percent plunge. Utilities, food producers and retailers led gains among the 33 Topix industry groups.

Sumitomo Dainippon Pharma Co. dropped 4.2 percent, leading declines on the Nikkei 225. Its schizophrenia drug Latuda’s patent expiry in 2019 will lead to a “considerable damage to earnings,” Nomura Holdings Inc. said in a report.

The Topix followed global equities higher after oil climbed above $37 a barrel amid forecasts for falling U.S. stockpiles. West Texas Intermediate crude advanced 2.9 percent while Brent traded 3.2 percent higher on Tuesday. WTI slid 1.7 percent to $37.22 in trading Wednesday.

Japanese shares are among the best performing major stock indexes this year in dollar terms, with fishing and agricultural stocks, drugmakers and retailers leading gains on the Topix. The gauge’s advance this year beats the MSCI World Index, which was down 1.3 percent as of the Tokyo close.

Meiji Holdings Co., a milk producer, surged 83 percent this year to rise the most on the Nikkei 225. Sharp Corp., the electronics maker faced with restructuring following losses, tumbled the most on the measure with a 53 percent drop for 2015.

Below Peak

The Topix is still 8.5 percent below its peak in August after China’s shock currency devaluation and the specter of Federal Reserve interest rate hikes sparked a global equity selloff. The measure trades at 15 times estimated earnings, compared with 18 times for the S&P 500 and 16 times for Europe’s Stoxx.

“Japanese shares aren’t expensive,” said Yamashita. “That’s one of the best things about Japanese shares right now.”

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