Bloomberg News

Topix Rebounds After Weekly Decline as G-20 Quiet on Yen

February 18, 2013

Japanese stocks rose, with the Topix Index rebounding from its first weekly loss since November, after Group of 20 finance chiefs signaled Japan has scope to keep stimulating its stagnant economy.

Toyota Motor Corp., the world’s biggest carmaker by market value, gained 1.3 percent. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank, increased 4.9 percent. Fast Retailing Co. climbed 2.1 percent after a report the clothing retailer showed an interest in U.S.-based Gap Inc. Dainippon Screen Manufacturing Co. surged 11 percent after Goldman Sachs Group Inc. raised its investment rating on the stock to buy.

The Topix Index rose 2.2 percent to 962.69 at the 3 p.m. close of trading in Tokyo. The measure has surged 33 percent since Nov. 14, when national elections were announced, spurring optimism Prime Minister Shinzo Abe and the central bank will lead the country out of deflation. The Nikkei 225 Stock Average climbed 2.1 percent to 11,407.87, its biggest gain since Feb. 6.

“Investors are really playing the weak yen, buying on the uptrend in stocks now after the G-20,” said Khiem Do, Hong Kong-based head of Asian multi asset strategy at Baring Asset Management Ltd., which manages about $51 billion globally. “At the moment, it’s like a honeymoon period for Abe. We have been adding to our holdings in Japanese stocks, but going forward it depends on valuations and the implementation of Abe’s plans.”

About 13 stocks gained for each that fell and all 33 industry groups on the Topix index rose today. The measure is trading at 1.1 times book value, compared with 2.3 for the Standard & Poor’s 500 Index and 1.6 for the Stoxx Europe 600 Index.

Weaker Yen

Toyota rose 1.3 percent to 4,785 yen, the fourth-biggest boost to the Topix Index. Honda Motor Co., which gets more than 80 percent of its revenue overseas, increased 1.5 percent to 3,505 yen. Canon Inc., the world’s biggest camera maker, climbed 1.4 percent to 3,310 yen.

Japanese exporters gained as the yen touched 94.22 against the dollar and extending losses that made it the worst- performing major currency in the past three months. A weaker yen boosts overseas earnings for Japanese exporters when repatriated.

Two days of talks between G-20 finance ministers and central bankers ended in Moscow Feb. 16 with a statement pledging not to “target our exchange rates for competitive purposes,” without singling out Japan. Japanese officials denied driving down their currency, saying its decline was a byproduct of their efforts to revive the economy.

Banks Jump

Japan’s three biggest banks jumped following the yen’s decline on speculation the currency move may boost income from loans overseas. Banks posted the largest increase among the 33 industry groups on the Topix Index. Mitsubishi UFJ rose 4.9 percent to 533 yen, the biggest boost on the Topix. Mizuho Financial Group Inc. advanced 4.1 percent to 204 yen, while Sumitomo Mitsui Financial Group Inc. gained 5 percent to 3,820 yen.

“Megabank shares are sensitive to moves in the yen,” said Yoshinobu Yamada, a Tokyo-based analyst at Deutsche Bank AG. “The impact of yen weakness is big because they are expanding overseas assets and currency depreciation boosts their profit when repatriated.”

Among other stocks that rose, Shinsei Bank Ltd., the Japanese lender partly owned by J. Christopher Flowers, jumped 9.6 percent to 206 yen. All banks on the Topix rose at least 1.6 percent today.

Fast Retailing Highs

Fast Retailing advanced 2.1 percent to 25,390 yen, the biggest boost to the Nikkei 225 its highest closing level on record. U.S. clothing retailer Gap has hired an adviser following interest from Fast Retailing, CNBC said, citing a report by StreetAccount, a financial news service owned by FactSet Research Systems Inc.

Dainippon Screen surged 11 percent to 483 yen, the biggest jump on the Nikkei 225. The company was raised to buy by Goldman Sachs, which said its earnings should bottom this year and sales should gain.

Among stocks that fell, coil-maker Sumida Corp. lost 5.6 percent to 522 yen, the third-biggest drop on the Topix. The company forecast net income will be 28 percent lower than the year ended Dec. 31.

The Nikkei Stock Average Volatility Index gained 3.5 percent to 27.76, indicating traders expect a swing of about 8 percent of the benchmark gauge over the next 30 days. Volume on the measure was about 8.8 percent lower than its 30-day average at the close of trading.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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