Bloomberg News

Japan Stocks Pare Monthly Loss as Shippers, Steelmakers Rebound

November 29, 2011

Nov. 29 (Bloomberg) -- Japanese stocks rose, with the Nikkei 225 Stock Average paring its biggest monthly loss since August, as shipping companies and steelmakers rebounded.

Kawasaki Kisen Kaisha Ltd. and other shipping lines advanced, rising for a third day after the sector plunged by as much as 25 percent this month. JFE Holdings Inc. and Kobe Steel Ltd. both rebounded for a third day. Nikon Corp., a camera maker that depends on Europe for about a quarter of its sales, gained 2.5 percent on optimism leaders in the region will boost efforts to end the debt crisis. Japanese stocks extended gains in the final hour of trading amid daily turnover that was 30 percent lower than this year’s average.

“Investors are likely to buy shares even on small news because stocks have been sold too much globally on lingering debt issues in European countries,” said Seiichiro Iwamoto, who helps oversee about $35 billion in Tokyo at Mizuho Asset Management Co. “People in the market are swinging between joy and sorrow on even the smallest news from the region.”

The Nikkei 225 climbed 2.3 percent to 8,477.82 at the 3 p.m. close in Tokyo. For the month, the gauge has lost 5.7 percent amid signs Europe’s crisis is spreading to the region’s major economies. The broader Topix climbed 2 percent to 729.68 today.

The Standard & Poor’s 500 Index gained 2.9 percent yesterday in New York after Thanksgiving retail sales climbed to a record amid speculation European leaders will do more to tame the debt crisis. U.S. retail sales during the holiday weekend increased 16 percent to $52.4 billion, the National Retail Federation said on Nov. 27, citing a BIGresearch survey.

Shippers, Steelmakers

Shipping lines and steelmakers gained the most among the 33 Topix industries groups today, rebounding after the sectors plunged by at least 35 percent this year.

Kawasaki Kisen, which sank by more than 60 percent this year, jumped 6.2 percent to 138 yen. Shares gained even after the Nikkei newspaper reported the shipping line will likely post a net loss of 32 billion yen ($409 million) this fiscal year on sluggish demand from the U.S. and Europe.

Mitsui O.S.K. Lines Ltd., the nation’s No. 2 shipping line by revenue, rose 3.3 percent to 248 yen. The shares have fallen by more than half this year.

JFE Holdings advanced 5.6 percent to 1,399 yen. Kobe Steel climbed 3.5 percent to 118 yen. The companies have dropped more than 40 percent this year.

Lower Turnover

Japanese stocks climbed even after the jobless rate rose for the first time in three months, adding to evidence that the nation’s post-earthquake rebound is fading. The unemployment rate increased to 4.5 percent in October.

Shares extended gains in the final hour trading amid lower- than-average turnover. The value of shares traded on the Tokyo Stock Exchange’s first section totaled 941 billion yen, about 30 percent less than this year’s average of 1.3 trillion yen.

Investors covering shorts may have also contributed to the Nikkei’s climb in afternoon trading, according to Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion.

“When short positions are accumulating in the market, investors tend to react quickly and buy back shares even on trivial news,” said Kurose. “Short positions are accumulating not only in Japan but also in Hong Kong and China.”

Among companies in the Nikkei 225, an average of 2 percent of the shares available for trading have been borrowed, according to Data Explorers, a London-based research firm. That’s down from 3 percent on Oct. 3. Short selling is when traders borrow shares and sell them with the hope of repurchasing the securities later at a lower price and pocketing the difference.

Exporters to Europe

Japanese exporters to Europe advanced today. Nikon gained 2.5 percent to 1,788 yen. Ricoh Co., a maker of cameras and office-equipment that depends on the region for more than 20 percent of its sales, rose 3.2 percent to 688 yen.

In Europe, German newspaper Welt am Sonntag reported German Chancellor Angela Merkel and French President Nicolas Sarkozy are discussing an agreement under which member states will commit to tighter budget discipline without waiting for treaty changes. The newspaper did not say where it got the information.

“There are increasing expectations that some additional support for the European debt crisis will come out at the European summit meeting next month,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “The expectations won’t last long and the markets will likely react nervously to European news.”

--With assistance from and Masaaki Iwamoto in Tokyo and Lynn Thomasson in Hong Kong. Editor: Jason Clenfield.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.

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


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