Japan’s Nikkei 225 Rises on Yen Optimism; Nippon Mining Falls
March 11, 2010, 11:24 PM ESTBy Masaki Kondo
March 12 (Bloomberg) -- Japan’s Nikkei 225 Stock Average gained, set for its biggest weekly advance in three months, on optimism the yen will weaken amid speculation the central bank will loosen monetary policies.
Nissan Motor Co., a carmaker that gets 77 percent of its revenue outside Japan, rose 2.3 percent. Takeda Pharmaceutical Co., which counts North America as its biggest export market, gained 1.5 percent on expectations U.S. health-care reform will not pass. Nippon Mining Holdings Inc., whose affiliate is developing a Chilean copper mine, fell 1.8 percent after Chile was struck by an earthquake. The Bank of Japan may make more loans available for banks, central bank officials said. The yen weakened after Finance Minister Naoto Kan said intervention was always an option to stop abrupt foreign-exchange movements.
The Nikkei 225 Stock Average climbed 0.6 percent to 10,729.08 as of 12:40 p.m. in Tokyo. The broader Topix index advanced 0.3 percent to 933.16, although almost as many shares gaining as falling.
“The economy is improving, so investors aren’t bearish; nor are they bullish, as a recovery in corporate earnings is almost fully priced in,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion in Tokyo. “We are in a stalemate. I would think highly of any additional easing by the BOJ to preempt the yen’s appreciation.”
The Nikkei 225 has gained 3.5 percent this week, set for the biggest weekly advance since the five days ended Dec. 4, as a lower-than-estimated U.S. unemployment rate boosted investor confidence in a U.S. economic recovery. Shares in the Topix trade at 32 times estimated earnings, the highest level globally, according to data compiled by Bloomberg.
‘Determined’ BOJ
Nissan, Japan’s No. 3 automaker, jumped 2.3 percent to 763 yen, while Shin-Etsu Chemical Co., which gets 61 percent of its sales overseas, climbed 2.4 percent to 5,220 yen. Hoya Corp., the nation’s biggest maker of eyeglass lenses, jumped 1.7 percent to 2,430 yen.
The Bank of Japan may expand a 10 trillion-yen ($110 billion) fund for bank loans in a March 16-17 policy meeting, according to two central bank officials who spoke on condition of anonymity.
“The BOJ is increasingly seen as determined to beat deflation, and that’s propping up investor sentiment,” said Kenichi Hirano, general manager and strategist at Tokyo-based Tachibana Securities Co. “Further monetary easing will widen a gap in borrowing costs between Japan and other countries, which may lead to the yen’s depreciation.”
Chile’s Earthquake
The yen headed for a second weekly decline versus the dollar after Kan said today in parliament “if markets move too abruptly, I’m aware that we have the option of currency intervention.”
The yen weakened to 124.15 against the euro today from 123.31 at the 3 p.m. close of stock trading in Tokyo yesterday, and fell to 90.75 versus the dollar from 90.38. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.
Takeda, Asia’s biggest drugmaker, gained 1.5 percent to 4,135 yen, and Astellas Pharma Inc. rose 0.8 percent to 3,360 yen.
Health-care stocks in the Standard & Poor’s 500 Index rose 0.4 percent in the U.S. yesterday after the Senate parliamentarian made it harder for Democrats to bypass Republican opposition to industry reform. Scott Tapley, a health-care money manager at 1st Source Investment Advisors Inc., said he is “more convinced that the health-care reform is completely dead.”
Nippon Mining dropped 1.8 percent to 431 yen, while Mitsui Mining & Smelting Co. fell 0.8 percent to 255 yen. Nippon Mining’s subsidiary and Mitsui Mining co-own Pan Pacific Copper Co., Japan’s biggest copper smelter and which is developing a copper deposit in Chile. A preliminary magnitude 7.2 earthquake hit Chile yesterday, the world’s biggest source of the metal.
--With assistance from Rita Nazareth, Craig Trudell in New York and Satoshi Kawano in Tokyo. Editors: Sam Waite, Nicolas Johnson.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
