Bloomberg News

Topix Index Rebounds From Decline After Kim Jong Il’s Death

December 20, 2011

Dec. 20 (Bloomberg) --?Japan’s Topix index snapped a five- day losing streak, rebounding after Asian markets plunged yesterday amid concern the death of North Korea’s Kim Jong Il could destabilize the region.

Mitsui O.S.K. Lines Ltd. led gains among shipping companies, Japan’s worst performing industry this year. Inpex Corp. climbed 3 percent after Credit Suisse Group AG raised its price target for the country’s No. 1 energy explorer. Olympus Corp. jumped 16 percent after a report Sony Corp. and Fujifilm Holdings Corp. are among companies that may consider investing in the scandal- hit camera-maker.

The Topix added 0.3 percent to 718.49 at the 3 p.m. trading close in Tokyo, snapping the longest losing streak since Aug. 9. The Nikkei 225 Stock Average rose 0.5 percent to 8,336.48. South Korea’s Kospi Index gained 0.9 percent, trimming yesterday’s 3.4 percent loss.

“The market is making up yesterday’s losses after Kim Jong Il’s death,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “This shows that Kim Jong Il’s death isn’t going to have that big of an impact.”

Futures on the Standard & Poor’s 500 Index rose 0.6 percent today. The index fell 1.2 percent in New York yesterday after European Central Bank President Mario Draghi said the bank’s founding treaty prevents it from buying more government bonds to fight the debt crisis.

‘Nuclear Weapons State’

Markets from Seoul to Hong Kong dropped yesterday after the death of the North Korean dictator raised concern his successor, Jong Il’s little-known son, Kim Jong Un, might harden the regime’s confrontational stance. North Korea has conducted underground nuclear tests twice in the last five years and its government-run media has reported it will become “a full nuclear weapons state” next year.

“I don’t think North Korea will do anything right after the leader’s death,” said Masaru Hamasaki, Tokyo-based chief strategist at Toyota Asset Management Co., which oversees the equivalent of $24 billion. “I don’t think they’re going to do anything too bold.”

The value of shares traded on the Topix index fell to 677 billion yen today, the lowest since December 2008, and the number of shares changing hands was a third below the 100-day average. There are seven trading days left in 2011, set to be the worst year for the gauge since 2008. The index has fallen 21 percent since January amid natural disasters at home and in Thailand and as Europe’s debt crisis weighs on export demand and investor confidence.

March 11

The impact of Japan’s March 11 earthquake and tsunami has largely decided the Topix’s biggest winners and losers this year. Tokyo Electric Power Co., owner of the Fukushima nuclear power plant destroyed in the disaster, dropped 88 percent, the gauge’s biggest decline. SxL Corp., a builder that has benefited from reconstruction work, surged 264 percent.

The Topix rose today after Federal Reserve Bank of Richmond President Jeffrey Lacker predicted moderate economic growth in the U.S. next year. The world’s biggest economy will expand 2 percent to 2.5 percent next year despite slowing global growth, he said.

The index that tracks shipping companies advanced the most today among the Topix’s 33 industry groups. Mitsui O.S.K. Lines, Japan’s second-biggest shipper by sales, gained 4 percent to 283 yen, after slumping as much as 7 percent yesterday. Larger Nippon Yusen K.K. jumped 2.7 percent to 192 yen. The Topix index of container lines has plunged by about half this year.

Inpex, Olympus

Inpex advanced 3 percent to 485,500 yen today after Credit Suisse raised its target price for the shares to 700,000 yen from 580,000 yen. Progress on an offshore liquefied natural gas project in Australia could boost the company’s energy reserves, Credit Suisse said.

Olympus rose by its daily limit to 1,065 yen. The maker of optical equipment may sell as much 100 billion yen ($1.28 billion) in preferred shares to shore up its balance sheet, the Nikkei newspaper reported without saying where it got the information. Sony and Fujifilm are among companies that may invest, according to the report.

Olympus was not the source of the Nikkei report, the company said in a statement. Spokesmen at Sony and Fujifilm declined to comment.

--Editor: Jason Clenfield, Jim Powell.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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