Japan stocks rose for the first time in five days on signs shares were oversold after the Topix Index yesterday fell to its lowest since 1983. Exporters advanced after the yen weakened against most of its major counterparts.
Mazda Motor Corp. (7261), an automaker that gets 77 percent of its sales abroad, rose 5.6 percent. Medical System Network Co. jumped 19 percent after the drug-store operator slumped 20 percent over the past two trading days. Canon Inc. (7751), the world’s biggest camera maker, gained 3.4 percent on a share buyback plan. Rengo Co. slumped 14 percent after a spokesman said the container maker was being investigated for possible price fixing.
The Topix advanced 1.8 percent to 708.24 at the 3 p.m. close of trading in Tokyo, the biggest daily advance since April 18. About four stocks gained for each that fell. The Nikkei 225 Stock Average (NKY) rose 1 percent to 8,382.00 with volume 9 percent above the 30-day average. Shares also gained before the Group of Seven nations hold a conference call today to discuss Europe’s debt crisis.
“It’s dicey to sell further because we may see a sharp rebound judging from valuations,” said Goya Nakao, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which manages about $64 billion in assets. “Stocks are oversold and developed nations’ bonds are being bought too much, and that’s obvious when you look at valuations and compare different assets.”
The Topix fell more than 20 percent from this year’s high on March 27 as of yesterday amid a deepening debt crisis in Europe and slowing growth in China. A drop of that magnitude signals the start of a bear market. The stocks on the measure are valued at 0.84 times book value, about the same level as in October 2008 amid the global financial crisis.
Japanese exporters gained after the yen fell against 15 of its 16 major counterparts yesterday. A weaker Japanese currency boosts overseas earnings.
Mazda added 5.6 percent to 94 yen. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, rose 3.3 percent to 1,029 yen after falling yesterday to its lowest since 1980.
The 14-day relative strength index for the Topix fell to 21 yesterday, dropping further below the 30 threshold that some traders say signals a rebound is likely. Medical System Network surged 19 percent to 495 yen after its 14-day RSI slid to 29 yesterday.
The Nikkei 225 Volatility Index (VNKY) slid 9.3 percent to 28.04, indicating traders expect a swing of about 8 percent on the benchmark gauge over the next 30 days.
G-7 Debt Talks
Futures on Standard & Poor’s 500 Index (SPXL1) gained 0.5 percent today after Canadian Finance Minister Jim Flaherty said G-7 finance ministers and central bank governors will “have continuing discussions” about the European debt crisis. The index advanced less than 0.1 percent in New York yesterday, reversing losses as the cheapest price-to-earnings valuations in six months outweighed a drop in factory orders.
Canon gained 3.4 percent to 2,991 yen after saying it will spend as much as 50 billion yen ($638 million) to buy back up to 1.4 percent of its shares through July 27, according to a statement.
Nippon Sheet Glass Co. (5202) jumped 9 percent to 73 yen, its biggest rise since 2009, after the Nikkei newspaper reported the company doesn’t plan to raise capital and may idle more plants. The stock had the biggest advance on the Nikkei 225.
Rengo and Tomoku Co. are among companies being investigated by Japan’s Fair Trade Commission on suspicion of fixing prices for cardboard products, the Nikkei reported. Rengo spokesman Mitsuyuki Goto confirmed that the commission had searched the company’s Tokyo headquarters.
Rengo slumped 14 percent to 447 yen. Tomoku, a maker of container boards and paper products, slid 4.9 percent to 213 yen.
Fast Retailing Co. (9983), Asian’s biggest apparel chain, dropped 8.8 percent to 16,060 yen after saying same-store sales at its Uniqlo Japan shops fell 10.3 percent in May from a year earlier. The retailer cited lower customer traffic for the sales slump.
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