Bloomberg News

Topix Hits 1,000 on Kuroda; Volume Falls on System Error

March 04, 2013

Japan stocks rose a third day, with the Topix Index (TPX) touching 1,000 for the first time since 2010, as Bank of Japan nominee Haruhiko Kuroda vowed to fight deflation. Volume fell after a system error halted trading of Nikkei 225 Stock Average futures and options in Osaka.

Jowa Holdings Co. led property stocks higher on a Nikkei newspaper report real estate investment trusts may have raised record funds in anticipation of more easing. Hitachi Zosen Corp. led gains on the Nikkei 225 on a report it will sell reactor vessels in the U.S. East Japan Railway Co. gained 4.1 percent on a report it will resume bullet-train service to Akita following a derailment.

The Topix advanced 0.8 percent to close at 992.25 in Tokyo, the highest level since April 27, 2010. It earlier climbed above 1,000 for the first time since April 15, 2010. The Nikkei 225 (NKY) gained 0.4 percent to 11,652.29, with volume 21 percent below the 30-day intraday average.

“Kuroda formally made his intention clear and that’s why investors appreciated his resolve even though his stance was well-known,” said Tamiji Shinada, Tokyo-based executive director of investment research at Nomura Securities Co., Japan’s biggest brokerage. “Shares pared gains after digesting his comments and due to a technical issue tied to the system error.”

The Topix surged 37 percent from Nov. 14 amid optimism a new government will push bold policy to beat deflation and after Prime Minister Shinzo Abe nominated easing proponent Kuroda to lead the central bank. The measure is trading at 1.2 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Kuroda’s Pledge

Kuroda said the central bank will do whatever needed to end 15 years of deflation should he be named governor and indicated that open-ended asset purchases could begin sooner than 2014. The Asian Development Bank president, who was speaking today at his confirmation hearing at parliament, would take office after sitting BOJ head Masaaki Shirakawa retires March 19.

“Kuroda will do what he’s supposed to do in the long run, which is to continue to ease step-by-step,” said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about 5 trillion yen ($54 billion). “The focus will be on how he proceeds, how he manages expectations, and how he communicates with the market.”

Developers and banks advanced today on optimism additional monetary easing by the BOJ will boost land prices and lending.

Developers Jump

Jowa Holdings surged 11 percent to 2,202 yen and Nomura Real Estate Holdings soared 10 percent to 1,985 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, gained 1.7 percent to 3,835 yen. Shinsei Bank Ltd. added 6.4 percent to 217 yen.

Trading of Nikkei 225 derivatives restarted at 2:10 p.m. in Osaka. The reason for the system error is unclear, Japan Exchange Group Inc. spokeswoman Miwa Aonuma said by phone today. It’s the first outage for the J-Gate derivatives-trading platform since the Osaka bourse adopted it in February 2011. The failure began with options at 10:20 a.m. and spread to futures at 10:51 a.m., with trades of individual stock options not affected, Aonuma said.

The Nikkei Stock Average Volatility Index (VNKY) added 2.4 percent to 27.14, indicating traders expect a swing of about 7.8 percent on the benchmark gauge over the next 30 days. The gauge earlier plunged 26 percent, the biggest drop in volatility since March 22, 2011. Turnover on the Nikkei 225 was 1.38 trillion yen, 9.2 percent below the 30-day moving average.

Hitachi Zosen surged 13 percent to 160 yen after the Nikkei said it will sell the U.S. vessels that convert natural gas into synthetic oils.

Back on Track

East Japan Railway Co. gained 4.1 percent to 7,350 yen after the national broadcaster NHK said it will resume bullet- train service to Akita following safety checks. The service was halted after blizzard conditions caused a derailment on March 2.

Futures on the S&P 500 Index slid 0.5 percent today. The U.S. equity gauge advanced 0.2 percent on March 1, when the Institute for Supply Management’s gauge of factory activity climbed to 54.2, the highest reading since June 2011.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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