Bloomberg News

Japan Stocks Rise After Rocket Fails, Pare Gains on China GDP

April 13, 2012

April 13 (Bloomberg) -- Japanese stocks rose, with the Nikkei 225 (NKY) Stock Average rising the most in two weeks, after a North Korean rocket launch failed and Fast Retailing Co. forecast record profit. Shares pared gains as slower growth in China tempered optimism from a surge in new lending.

Fanuc Corp., which provides robotics for mainland factories, pared gains to 2.8 percent after the China gross domestic product report. Canon Inc., a camera maker that gets 27 percent of its sales in the Americas, advanced 1.3 percent after the U.S. Federal Reserve signaled interest rates will remain low. Fast Retailing Co. (9983), Asia’s biggest clothier, jumped 8.6 percent.

“It’s better to have it fail than succeed,” said Masahiko Ejiri, a senior fund manager in Tokyo at Mizuho Asset Management Co., which oversees $39 billion, speaking of North Korea’s unsuccessful rocket launch. “Even if they do build a nuclear weapon, it doesn’t matter if they can’t make it fly.”

The Nikkei 225 rose 1.2 percent to 9,637.99 at the 3 p.m. trading close in Tokyo, capping a 0.5 percent decline this week. The broader Topix Index gained 0.7 percent to 815.48, with Mitsubishi UFJ Financial Group Inc. contributing the most to the gain after a unit of Japan’s biggest bank said it wants to invest in a U.S. fund manager.

The Nikkei 225 gained 14 percent this year on signs of strength in the U.S. economy and policy easing around the world, including the Bank of Japan’s extension of an asset-purchase program. Shares extended gains yesterday after central bank Governor Masaaki Shirakawa pledged to continue to add monetary stimulus.

N. Korean Launch

Shares rose after a North Korean rocket today went to pieces shortly after liftoff, according to the nation’s news agency. The launch was condemned internationally as a violation of the nation’s agreement to end nuclear and long-range missile tests in exchange for U.S. food aid.

Stocks pared gains after China’s gross domestic product expanded 8.1 percent in the first quarter from a year earlier, the slowest in almost three years, the National Bureau of Statistics said in Beijing today. The median estimate was for 8.4 percent growth, according to a Bloomberg News survey of 41 economists.

“There were a lot of people looking to the report and especially coming at the end of the week, you’re seeing some investors sell to lock in profits,” said Hiroyuki Uekusa, general manager of trading at Meiji Yasuda Asset Management Co., which manages about $37 billion. “Investors have been expecting a slowdown scenario, and you’ve got a tug of war going between expectations that there will be more monetary easing and concern about falling share prices.”

The GDP figures outweighed the People’s Bank of China’s statement yesterday that local-currency-denominated loans rose to the most in a year in March. The number was the biggest surprise above economist estimates in more than a year.

Fanuc Rises

Fanuc added 2.8 percent to 15,010 yen after rising as much as 4.3 percent. Komatsu Ltd. (6301), a construction machinery maker that relies on China for 23 percent of revenue, rose 1 percent to 2,369 yen, paring an earlier gain of 2.5 percent.

Futures on the Standard & Poor’s 500 Index (SPXL1) lost 0.3 percent today. The gauge rose 1.4 percent in New York yesterday, capping its biggest two-day rally this year, after Federal Reserve Vice Chairman Janet Yellen and New York Fed President William C. Dudley said borrowing costs are likely to remain low through 2014. Shares climbed even after a report yesterday that jobless claims climbed last week.

Canon advanced 1.3 percent to 3,790 yen. Mazda Motor Corp., an automaker that gets 27 percent of its sales in North America, gained 3 percent to 137 yen.

Fast Retailing Jumps

Fast Retailing rose the most on the Nikkei 225 after raising its forecast for annual profit to a record and saying sales outside Japan will drive growth. It projected net income of 81.5 billion yen ($1 billion) in the year ending in August, the company said yesterday. The stock soared 8.6 percent to 18,970 yen.

Mitsubishi UFJ advanced 3.6 percent to 402 yen on plans for its trust arm to invest in fund managers based on the U.S. East Coast. The unit can spend as much as 150 billion yen on investments over the next three years, President Tatsuo Wakabayashi said.

Leading declines on the Nikkei 225, Sony Corp. dropped 5.5 percent to 1,444 yen. The consumer electronics company said it will try to win back customers from Apple Inc. by concentrating on mobile devices while shifting away from its loss-making television operations.

The Nikkei 225 Volatility Index fell 4.2 percent to 19.40, indicating traders expect a swing of about 5.6 percent on the benchmark gauge over the next 30 days. Trading volume was 13 percent above the 30-day average.

Shares on the Topix are valued at one times book value, compared with 1.4 times for the MSCI Asia Pacific Index, 2.2 times for the S&P 500 and 1.4 times for the Stoxx Europe 600 Index. A number below one means that investors can buy companies for less than the value of their assets.

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