Bloomberg News

Topix Snaps Longest Loss Streak Since ’09 on U.S. Housing

July 19, 2012

Japanese stocks rose, with the Topix Index snapping a nine-day losing streak, after U.S. housing starts jumped to the highest in almost four years, boosting the outlook for exporters.

Machinery maker Komatsu Ltd. (6301), which depends on the Americas for 23 percent of its sales, gained 3.3 percent. Advantest Corp., the world’s top producer of memory-chip testers, surged 6.5 percent after industry bellwether Intel Corp. topped profit estimates. Yaskawa Electric Co. jumped 8.4 percent after the factory robotics maker beat earnings expectations.

The Topix gained 0.9 percent to 747.13 at the 3 p.m. trading break in Tokyo after yesterday capping the longest losing streak since July 2009. The Nikkei 225 Stock Average (NKY) added 0.8 percent to 8,795.55, with about three shares rising for each that fell. Shares also gained on speculation China will do more to boost growth.

“The U.S. economy has gone through a bit of soft patch, but the housing sector does seem to be heading for recovery, which is positive from a longer-term perspective for America,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The market still likes what it sees.”

The Topix rebounded 7.4 percent from a 29-year low reached on June 4 as concern eased about Europe’s debt crisis and central banks around the world cut rates to shore up growth. China has “relatively large” room to support economic expansion, Zhang Peng, a Beijing-based researcher at the Ministry of Finance, said yesterday.

Shares on the index are valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.4 for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.

U.S. Housing

Futures on the S&P 500 (SPXL1) rose 0.3 percent today. The equity gauge advanced 0.7 percent in New York yesterday after the Commerce Department reported that U.S. housing starts jumped 6.9 percent last month to the highest since October 2008.

The Federal Reserve said in a survey based on reports from its 12 district banks that the economy expanded at a “modest to moderate” pace in June and early July. Fed Chairman Ben S. Bernanke yesterday told Congress that the central bank can limit inflation while providing record stimulus to bolster a flagging recovery marked by high unemployment.

Companies that do business in the U.S. advanced. Komatsu rose 3.3 percent to 1,744 yen. Sony Corp. (6758), Japan’s top exporter of consumer electronics, rose 1.6 percent to 980 yen.

Chip-related companies climbed after Intel reported second- quarter profit of 54 cents a share, exceeding the average analyst estimate by 2 cents. Advantest added 6.5 percent to 1,125 yen, while Renesas Electronics Corp. (6723) jumped 7.4 percent to 260 yen.

Yaskawa Electric

Yaskawa Electric advanced the most on the Nikkei 225, jumping 8.4 percent to 569 yen. The stock rose after operating profit fell 54 percent to 2.2 billion yen ($28 million) in the three months ended June 20 from a year earlier, beating Citigroup Inc.’s estimate for a 1.2 billion yen gain.

Yokogawa Electric Corp. (6841), a manufacturer of control equipment, gained 2.6 percent to 798 yen on expectations first- quarter operating profit will rise to 3 billion yen, according to a Nikkei newspaper report. The company is scheduled to report earnings on Aug. 10.

The Nikkei 225 Volatility Index (VNKY) declined 4.7 percent to 17.68, indicating traders expect a swing of about 5.1 percent on the benchmark gauge over the next 30 days. Trading volume on the gauge was 15 percent above the 100-day average.

Tepco Advances

Tokyo Electric Power Co. (9501), the owner of the crippled Fukushima Dai-Ichi nuclear power station, gained 4.8 percent to 132 yen after the government agreed to an 8.47 percent rate increase for households, according to Kyodo News. The utility’s stock on July 17 fell to its lowest level since at least 1974 on renewed concerns about nuclear safety.

Hokuriku Electric Power Co. rose 0.7 percent to 883 yen, and Kansai Electric added 1.1 percent to 750 yen. The utilities plunged yesterday on a Nikkei report that regulators will ask them to conduct geological studies after surveys showed that a fault under a Hokuriku Electric nuclear plant is probably active.

All Nippon Airways Co. fell 2.1 percent to 188 yen, its lowest level since at least 1974, after the carrier priced its shares at 184 yen each for a stock sale. The company is raising funds to buy jetliners and weigh buying stakes in other Asian airlines.

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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