Bloomberg News

Japanese Stocks Reverse Losses as China Growth Lifts Exporters

September 21, 2011

Sept. 21 (Bloomberg) -- Japanese stocks reversed losses on speculation the Federal Reserve will announce new measures to boost the world’s biggest economy and after a leading indicator signaled Chinese growth is withstanding a global slowdown.

Fanuc Corp., a maker of factory robots that gets about 40 percent of its sales in Asia, rose 1.4 percent. Daihatsu Motors Co., Japan’s largest producer of minicars, jumped 4.9 percent after introducing a new fuel-efficient model. Sumco Corp., a manufacturer of silicon wafers, dropped 6.1 percent after Nomura Holdings Inc. cut a forecast for semiconductor shipments.

The Nikkei 225 Stock Average gained 0.2 percent to 8,741.16 at the 3 p.m. close of trading in Tokyo after earlier falling as much as 0.2 percent. The broader Topix index advanced 0.3 percent to 757.13 amid lower-than-average trading volume ahead of a scheduled Fed statement today in Washington.

“It looks like China’s economy will be steady toward the end of this year,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “There’s a lot expectation that Fed will introduce some measures even if they aren’t that aggressive.”

Stocks gained after the Conference Board said its leading economic index for China, a gauge of prospects for expansion in the world’s second-largest economy, rose 0.6 percent in July. The result boosted investor confidence after the International Monetary Fund cuts its forecast for global growth this year to 4 percent from 4.3 percent.

‘Comfort to Investors’

“Any newsflow suggesting China’s growth rate is firm provides comfort to investors who have been concerned about a hard landing, alongside worries about a downturn in demand from the developed world,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “At the same time, markets are hanging on for what the Fed is going to do.”

Futures on the Standard & Poor’s 500 Index rose 0.3 percent today on bets the Fed will decide to replace short-term Treasuries in its portfolio with long-term bonds, according to economists surveyed by Bloomberg News. The policy would be designed to flatten the yield curve and encourage lending to boost economic growth.

In New York, the S&P 500 index lost 0.2 percent yesterday after a report that international officials won’t decide on Greece’s next aid payment until October. Officials plan to finish a review of Greece’s economy next month, Athens News Agency reported, without citing sources.

Exporters Rise

The Topix has lost about 16 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.91 times estimated book value, near the lowest since March 2009.

Trading volume fell to its lowest level since June 13 as investors waited for the outcome of the Fed meeting. The value of shares traded on the first section of the Tokyo Stock Exchange was 956 billion yen ($12.5 billion), about a third less than this year’s daily average of 1.4 trillion yen.

Shares of Japanese manufacturers that export to China advanced. Fanuc rose 1.4 percent to 11,280 yen, giving the biggest boost to the Nikkei 225. Komatsu Ltd., a maker of construction equipment that gets about a quarter of its sales in the mainland, gained 1.1 percent to 1,750 yen.

Daihatsu, Sumco

Daihatsu, a maker of minicars 51 percent owned by Toyota Motor Corp., surged 4.9 percent to 1,380 yen. The automaker yesterday started selling a model that gets 30 kilometers per liter (71 miles per gallon) of gasoline.

Makers of semiconductors and chip equipment dropped after Nomura lowered its forecast for growth in the value of chip shipments next year to 3.7 percent from 6.4 percent. Prices of dynamic-random-access memory, the chips used to help personal computers juggle multiple programs, are unlikely to recover, Nomura said today in a report.

Sumco Corp. slumped 6.1 percent to 765 yen, falling the most on the Nikkei 225, after Goldman Sachs Group Inc. cut its price estimate to 720 yen from 800 yen. Advantest slid 2.6 percent to 841 yen. The maker of chip-testers also fell after JPMorgan Chase & Co. slashed the company’s price target to 1,000 yen from 2,500 yen and cut its investment rating to “neutral” from “overweight.”

-- With assistance from Shani Raja in Sydney. Editors: Jason Clenfield, Jim Powell.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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