Bloomberg News

Nikkei 225 Advances to Six-Week High on Wen Stimulus Talk

August 16, 2012

Japanese stocks rose, with the Nikkei 225 Stock Average closing at a six-week high, after Chinese Premier Wen Jiabao said slowing inflation will allow more room to adjust monetary policy in the world’s second- largest economy.

Fanuc Corp. (6954), a manufacturer of robotics used in Chinese factories, climbed 4.3 percent. Canon Inc. (7751), a camera maker that gets almost 60 percent of its revenue from the U.S. and Europe, rose 2.8 percent after the yen weakened. Dai-Ichi Life Insurance Co. soared 6.6 percent, leading the sector higher after its investment in Janus Capital Group Inc. was called positive by Moody’s Investors Service.

“Monetary easing is taking effect in China,” said Kiyoshi Ishigane, a Tokyo-based strategist at Mitsubishi UFJ Asset Management Co., which oversees about $70 billion. “The premier seldom makes such direct remarks, but he might want to emphasize that the government wants to support the economy by monetary policies.”

The Nikkei 225 climbed 1.9 percent to 9,092.76 at the 3 p.m. close in Tokyo, its highest close since July 4. Volume on the gauge was about same as the 30-day average, even with many investors off this week for O-bon holidays. The broader Topix (TPX) Index rose 1.6 percent to 759.12, with almost four stocks advancing for each that fell.

Stocks rose on the Chinese premier’s comments on possible easing. There’s “growing room for monetary policy operation,” Wen said yesterday during an inspection tour of the eastern province of Zhejiang, according to state media. “We have the conditions and capabilities, and will be sure to fulfill this year’s economic and social development targets.” Downward pressure on the economy remains “relatively large,” he added.

Fanuc climbed 4.3 percent to 13,120 yen, the biggest contributor to the Nikkei 225 (NKY)’s gain. TDK Corp., a manufacturer of electronic parts that gets more than 25 percent of its sales from China, rose 3.1 percent to 3,505 yen.

U.S. Manufacturing

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.2 percent today. The gauge added 0.1 percent yesterday in New York as investors weighed manufacturing data for clues as to whether the Federal Reserve will move to stimulate the economy.

Industrial production in the U.S. increased in July, Fed data showed, propelled by a rise in motor vehicle output and a rebound in power use during the hottest month on record. A separate report showed manufacturing in the New York region unexpectedly contracted in August, the first decline since October.

“The U.S. economic data are mixed and business sentiment is neither good nor bad,” said Mitsushige Akino, who oversees about $633 million in Tokyo at Ichiyoshi Investment Management Co. “That’s boosting expectations the Fed may add to quantitative easing.”

Yen Weakens

The yen depreciated to as low as 79.36 against the dollar in Tokyo, from 79.01 when stocks started trading today. Against the euro, Japan’s currency eased to as low as 97.47 from 97.09. A weaker yen boosts overseas income at Japanese companies when repatriated.

Canon, the world’s biggest camera maker, rose 2.8 percent to 2,764 yen. Nissan Motor Co. (7201), a carmaker that gets almost half its sales in the U.S. and Europe, gained 1.8 percent to 783 yen.

The Topix has rebounded 9.2 percent from this year’s low on June 4 as central banks around the world ease policy to support growth. The price of shares on the gauge stood at 0.9 times book value, compared with 2.2 times for the S&P 500 and 1.4 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.

Insurers lead gains among the Topix’s 33 industry groups. Dai-Ichi Life Insurance gained the most on the Nikkei 225, rising 6.6 percent to 86,700 yen, after Moody’s said the insurer’s agreement to acquire up to 20 percent of fund manager Janus’s equity is credit positive.

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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