Bloomberg News

Japanese Stocks Rise on U.S. Home Prices; Renesas Soars

August 29, 2012

Japan stocks gained after U.S. home prices rose for the first time in almost two years and as investors await Federal Reserve Chairman Ben S. Bernanke’s speech this week. Shares of Renesas Electronics Corp. soared on a report Kohlberg Kravis Roberts & Co. will buy the chipmaker.

Bridgestone (5108) Corp., a tiremaker that counts the Americas as its biggest market, gained 1 percent. Renesas surged a record 35 percent after the Nikkei newspaper reported KKR will spend 100 billion yen ($1.3 billion) for a controlling stake. Sharp Corp. jumped 7 percent after offering to buy out workers. Daikin Industries Ltd. (6367) lost 3.5 percent on a report the manufacturer of air conditioners will acquire Goodman Global Inc. of Texas.

“The U.S. economy has actually entered into a recovery stage led by housing,” said Masaru Hamasaki, Tokyo-based chief strategist at Toyota Asset Management Co., which manages the equivalent of $23 billion. “U.S. home prices are recovering, thanks to government measures to keep long-term interest rates low. Investors are paying so much attention to Bernanke’s remarks in Jackson Hole that they can’t take a position until they’ve heard the speech.”

The Topix (TPX) Index gained 0.5 percent to 750.03 at the 3 p.m. close of trading in Tokyo, the steepest increase since Aug. 17, with almost twice as many shares rising as declining. The Nikkei 225 Stock Average (NKY) rose 0.4 percent to 9,069.81, with volume almost 10 percent below the 30-day average.

Consumer Confidence

Futures on the Standard & Poor’s 500 Index added 0.1 percent today. The underlying gauge slid 0.1 percent yesterday as a report showed confidence among U.S. consumers fell in August by the most in 10 months. Home prices in 20 U.S. cities climbed in June from a year earlier, the first gain in almost two years, indicating the market that triggered the recession is beginning to rebound.

Bridgestone, which gets more than 40 percent of its sales from the Americas, gained 1 percent to 1,876 yen. Fuji Heavy Industries Ltd., which makes Subaru vehicles and gets more than 45 percent of its revenue in North America, added 0.9 percent to 646 yen.

“The U.S. economy has avoided a worst-case scenario, but isn’t strengthening,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest lender by market value. “Housing prices show a recovery trend, but the other economic data is a mixed bag.”

Shares of companies linked to the semiconductor industry gained. Renesas surged by its daily limit of 80 yen to 308 yen after the Nikkei reported private-equity firm KKR will buy new shares to take control of the unprofitable chipmaker. Renesas said it wasn’t the source of the report.

NEC, Advantest

NEC Corp., a major shareholder of Renesas (6723), rallied 6.5 percent to 114 yen. The stock also gained after Hon Hai Precision Industry Co. agreed to buy some of the electronics manufacturer’s patents. Advantest Corp., the world’s biggest maker of memory-chip testers, rose 4.9 percent to 1,198 yen.

Sharp soared 7 percent to 230 yen, the most in the Nikkei 225, after the electronics maker yesterday said it will offer buyouts to 2,000 workers as part of a plan to cut 5,000 jobs. The company faces back-to-back annual losses and is the worst performer on Japan’s benchmark index this year.

Bernanke probably won’t provide specific plans for further monetary action at a meeting of central bankers in Jackson Hole, Wyoming, at the end of the week, according to money managers surveyed by Bloomberg. The Fed signaled last week it’s ready to take further steps to spur the economy. Many policy makers said additional stimulus probably will be needed soon unless the economy shows signs of a sustainable recovery, according to minutes of the central bank’s most recent meeting.

Hold Fire

“Bernanke’s probably going to hold fire here, while sending an encouraging message,” said Angus Gluskie, managing director at White Funds Management in Sydney who oversees more than $350 million. “We’re probably going to see him say what he’s said over the last couple of months, which is simply that they will act, but only if conditions continue to deteriorate.

The Topix has rebounded 7.8 percent from this year’s low on June 4 amid speculation central banks will stimulate growth. Stocks on Topix are valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.

Daikin Drops

Daikin declined the most on the Nikkei 225, falling 3.5 percent to 2,073 yen after the Nikkei reported the air- conditioner manufacturer will buy Goodman Global for 300 billion yen. The company generated 10 percent of its revenue in the Americas as of June 30, according to data compiled by Bloomberg.

‘‘The company needs to strengthen its U.S. operations, but the purchase price of 300 billion yen is too high, which may be reflecting in the stocks,” said Hitoshi Ohnishi, an analyst at Iwai Cosmo Securities Co.

Stocks linked to Europe rose as the single currency traded near its highest level in eight weeks before Italy sells debt amid speculation the European Central Bank is preparing a bond- buying program that may cap borrowing costs in the region.

The euro rose to as high as 98.79 yen in Tokyo today, compared with 98.08 at the close of stock trading yesterday. A stronger euro boosts the value of overseas income for exporters to the region.

Nikon Corp. (7731), a camera maker that relies on Europe as its biggest market, gained 1.8 percent to 2,249 yen. Kyocera Corp. (6971), an electronics maker that gets almost a fifth of its sales in the region, climbed 1.5 percent to 6,900 yen.

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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