Bloomberg News

Most Japanese Stocks Advance Ahead of U.S. Economic Data

August 21, 2012

Most Japanese stocks advanced, ahead of U.S. housing and durable goods data expected to show signs of recovery. Gains were limited as German criticism of the European Central Bank’s bond-buying plan tempered hopes for stimulus.

Funai Electric Co., an audio-visual equipment company that counts North America as its biggest market, climbed 2.4 percent. Brother Industries Ltd. (6448), a maker of office equipment that relies on Europe for almost 30 percent of its sales, sank 1.5 percent. Softbank Corp. (9984), a provider of Apple Inc.’s iPhone, contributed the most to communications stocks’ advance on the Topix (TPX) Index after Apple set a U.S. record for market value.

The Topix rose 0.1 percent to 765.26 at the 3 p.m. close in Tokyo, with about three shares rising for every two that fell. The Nikkei 225 Stock Average (NKY) fell 0.2 percent to 9,156.92, after rising as much as 0.3 percent earlier. Volume was 30 percent below the 30-day average ahead of data this week expected to show improvement in U.S. housing and durable goods.

“Concerns about the economic slowdown in the U.S. are easing,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees about $76 billion. “The markets are moving like a seesaw, swayed by whatever European officials say. With no catalysts to be found in the markets, investors are looking for anything. Short-term individual investors may look to Apple” and buy related shares.

The Topix has rebounded 10 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 Standard & Poor’s 500 Index 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.

Apple Record

Futures on the S&P 500 added 0.1 percent today. The gauge closed little changed yesterday in New York, finishing within one point of a four-year high reached in April. Tech shares rallied after Apple’s market value reached a record $623.5 billion, but gains were offset by concern over Europe’s debt crisis.

Companies linked to Apple gained. Softbank jumped 1.4 percent to 3,190 yen. Foster Electric Co., which makes parts for Apple’s iPod digital music player, rose 1.7 percent to 1,273 yen.

Exporters to the U.S. advanced on expectations the nation’s home sales and durable goods orders rose in July, signaling the world’s biggest economy is starting to strengthen after a second-quarter slowdown, analysts said.

Funai Electric, which gets half its revenue from North America, rose 2.4 percent to 1,134 yen. Fuji Heavy Industries Ltd. (7270), the manufacturer of Subaru cars that gets 46 percent of its sales in the region, climbed 1.1 percent to 669 yen.

‘Significant Risks’

Euro-zone government bond purchases “entail significant stability risks,” the Bundesbank said in its monthly report yesterday. ECB President Mario Draghi said on Aug. 2 that the bank is working on a plan to intervene in the secondary market to lower yields in countries that ask Europe’s bailout fund to buy its bonds in the primary market. The central bank’s governing council may decide at its next gathering to set yield limits on each country’s debt, Germany’s Spiegel magazine reported Aug. 19, without saying where it got the information.

The ECB said the council has not discussed any plan to target bond yields and that “it is absolutely misleading to report on decisions,” a bank spokesman said in an e-mailed statement.

Brother Industries, which counts Europe as its biggest market, slumped 1.5 percent to 834 yen. Roland Corp., a maker of electronic musical instruments that gets a third of its sales from Europe, sank 2.1 percent to 642 yen.

Shipping Slump

Shipping lines led declines among the Topix’s 33 industry groups after the target prices for Japan’s top three shipping companies was cut by Citigroup Inc. Cargo rates aren’t expected to rebound on expectations China will cut steel production, deepening a slump in iron-ore demand, according to a Japanese- language report from the investment bank yesterday.

Nippon Yusen K.K., the nation’s top shipping line by sales, slid 1.1 percent to 175 yen. Kawasaki Kisen Kaisha Ltd. lost 1.8 percent to 111 yen. Mitsui O.S.K. Lines Ltd. fell 2.7 percent to 220 yen after its equity rating was trimmed to neutral from buy by Citigroup.

Fujitsu Ltd. (6702) gained the most in the Nikkei 225, climbing 3.7 percent to 335 yen. The computer-service provider’s equity rating was raised to buy from neutral by Citigroup, which said the company’s sluggish European business and other factors were already priced into the shares.

-- With assistance from Adam Haigh in Sydney. Editor: Jim Powell

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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