Bloomberg News

Japanese Stocks Advance on Yen, China Manufacturing PMI

November 01, 2012

Japan stocks advanced for a second day after the yen weakened and official data showed China’s manufacturing expanded for the first time in three months. Panasonic (6752) Corp. led electronics makers lower after forecasting a loss 30 times bigger than expected.

Komatsu Ltd. (6301), a construction-machinery maker that gets 14 percent of its sales from China, rose 3.1 percent. Nippon Meat Packers Inc. (2282) soared 13 percent on a plan to buy back as much as 15 billion yen ($188 million) in shares. Panasonic plunged 19 percent, the most since at least 1974, to lead declines on the Nikkei 225 (NKY) Stock Average.

The Nikkei 225 added 0.2 percent to 8,946.87 at the 3 p.m. close in Tokyo, reversing a 0.6 percent drop. Volume on the gauge was more than 10 percent above the 30-day average. The broader Topix (TPX) Index rose 0.1 percent to 743.32, with about three shares advancing for every two that fell.

“There’s expectation that the weakening yen may to a certain degree put a brake on deteriorating corporate earnings,” said Toshio Sumitani, a strategist at Tokai Tokyo Financial Holdings Inc. “China’s manufacturing is supporting the market.”

The Topix has risen 3.4 percent since Sept. 6 after the European Central Bank started a global wave of stimulus to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the gauge traded 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.

Yen Weakens

The yen fell to as low as 80.13 against the dollar today in Tokyo, compared with 79.58 at the close of stock trading yesterday. Japan’s currency weakened to 103.89 against the euro from 103.14. A weaker yen boosts overseas income at Japanese companies when repatriated.

Toyota Motor Corp., a carmaker that gets 25 percent of its sales in North America, climbed 0.8 percent to 3,090 yen. Roland Corp., a maker of electronic musical instruments that gets a third of its sales from Europe, rose 0.9 percent to 540 yen in Osaka.

Panasonic tumbled by its daily limit of 100 yen, or 19 percent, to 414 yen, its biggest decline in at least 38 years. The electronics maker reversed its full-year forecast to a loss of 765 billion yen from a 50 billion yen profit, citing weak demand and restructuring costs. Analysts surveyed by Bloomberg News had expected a loss of 24.7 billion yen. The projection for the second-highest loss in its history prompted Panasonic to say it won’t pay a dividend for the first time since 1950.

Sony, Sharp

Sony fell 4.1 percent to 915 yen, while Sharp lost 1.7 percent to 169 yen. Both companies reported earnings at 3 p.m. close of market. Sony, Japan’s biggest consumer-electronics exporter, unexpectedly posted its seventh straight quarterly loss on falling demand for its TVs. Sharp increased its full- year loss forecast amid falling demand for TVs and display panels used in smartphones and tablet computers.

Japan’s earnings season peaks this week, with more than 570 of the 1,676 Topix companies reporting results. Of the 320 companies on the Topix which have reported quarterly revenue since Oct. 1, and for which Bloomberg News has estimates, 66 percent have missed projections.

China Manufacturing

Companies linked to China rose after an official report showed the nation’s manufacturing expanded for the first time since July, adding to signs economic growth in the world’s second-biggest economy is rebounding after a seven-quarter slowdown.

The Purchasing Managers’ Index rose to 50.2 in October from 49.8 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That matched the median forecast in a Bloomberg News survey of 30 economists. A reading above 50 indicates expansion.

Komatsu rose 3.1 percent to 1,723 yen. Fanuc Corp. (6954), a producer of robotics for Chinese factories, added 1.2 percent to 12,860 yen.

Futures on the S&P 500 slid 0.3 percent in New York. Most U.S. stocks rose yesterday as equity markets reopened after a two-day closure caused by Hurricane Sandy, the longest weather- related shutdown since 1888. A Chicago area purchasing managers’ index showed an unexpected contraction.

Nippon Meat jumped 13 percent to 1,114 yen, the most on the Nikkei 225, after saying it will buy back up to 7.08 percent of its shares.

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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