Bloomberg News

Nikkei 225 Climbs to 2007 High as Yen Falls to Lowest Since May

December 03, 2013

Japanese stocks rose, with the Nikkei 225 Stock Average climbing to an almost six-year high, as the yen fell to the lowest since May versus the dollar after data showed U.S. manufacturing unexpectedly accelerated last month.

Mazda Motor Corp., an automaker that gets 30 percent of its sales in North America, added 1.7 percent. Sekisui Chemical Co. jumped 7.5 percent as the Nikkei newspaper reported that it developed a cheaper and longer-lasting material for lithium-ion batteries used in electric vehicles. Nippon Paper Industries Co. gained 5.7 percent as Credit Suisse Group AG raised the stock’s target price.

The Nikkei 225 Stock Average added 0.6 percent to 15,749.66 at the close in Tokyo, the highest since Dec. 12, 2007. The Topix rose 0.3 percent to 1,262.54. Trading of the Jasdaq Top-20 Index was halted in the afternoon due to a calculation error. The yen touched 103.38 per dollar today, the weakest since May. Investors awaited the release of U.S. jobs data on Dec. 6.

“I think it’s easier to buy Japanese stocks with a weaker yen while investors may be nervous about other share markets ahead of the U.S. jobs data,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about 6.13 trillion yen ($59 billion). “But shares can fall anytime because they have risen very fast.”

The Topix (TPX) has rallied 47 percent this year, poised for its biggest annual gain since 1999. The index traded at 1.28 times book value today, compared with 2.60 for the S&P 500 and 1.80 for the Stoxx Europe 600 Index yesterday.

U.S. Manufacturing

Futures on the Standard & Poor’s 500 Index were little changed today. The equity measure dropped 0.3 percent yesterday.

The Institute for Supply Management’s index rose to 57.3, the highest since April 2011, from 56.4 a month earlier, the Tempe, Arizona-based group’s report showed yesterday. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 55.1.

“U.S. yields have risen on economic improvement,” said Toshihiko Matsuno, a strategist at Tokyo-based SMBC Friend Securities Co., a unit of Sumitomo Mitsui Financial Group Inc. “A wider yield gap between Japan and the U.S. is helping the yen to weaken.”

Benchmark 10-year Treasuries (USGG10YR) yielded 219 basis points more than similar-maturity Japanese government bonds yesterday, near the 223 basis-point spread reached in September that was the widest since April 2011. The gap has increased from 65 basis points in June 2012.

Mazda, Panasonic

American employers may have added 181,000 jobs in November, compared to 204,000 in October, according to the median estimate of economists surveyed by Bloomberg before the Labor Department data on Dec. 6.

Mazda gained 1.7 percent to 490 yen as the yen dropped. Panasonic Corp., the electronics manufacturer that gets 48 percent of its sales abroad, gained 1.7 percent to 1,186 yen.

Sekisui Chemical soared 7.5 percent to 1,298 yen, the highest since 1996. The company developed a silicon-based material for use in lithium-ion car batteries that can store three times as much power as existing cells, the Nikkei newspaper reported today. Sekisui Chemical expects the material to cut battery production costs by more than 60 percent and to begin mass production in 2015, the report said.

Nippon Paper gained 5.7 percent to 1,972 yen after its target price was lifted to 2,100 yen from 1,600 yen at Credit Suisse, which kept its outperform rating for the stock. Oji Holdings Corp. gained 2.5 percent to 495 yen after Credit Suisse raised the target price to 570 yen from 500 yen. Paper companies rose the most among the 33 Topix industry groups.

Trading of the Jasdaq Top-20 was halted due to a human error that meant Rakuten Inc. was accidentally removed from the index calculations, according to Naoya Takahashi, a spokesman for Japan Exchange Group Inc. The bourse realized the error at 12:20 p.m. local time, Takahashi said. Trading stopped as of 1:17 p.m., according to data compiled by Bloomberg.

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

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net


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