Japan Stocks Rise for Third Day on Tankan Survey, Yen – Bloomberg

Japanese shares rose, with the Topix (TPX)
index capping the biggest three-day rally in almost three
months, as the yen fell and a survey showed positive sentiment
among manufacturers for the first time in seven quarters.

Mazda Motor Corp. (7261), an automaker that gets 73 percent of
sales abroad, rose 4.9 percent. Brokerages gained the most among
the 33 Topix subsectors. Hisamitsu Pharmaceutical Co. (4530) jumped 6.4
percent after the drugmaker won U.S. approval for a hot flash
medicine. Aeon Co. (8267) added 2.3 percent after the Nikkei newspaper
reported Japan’s No. 1 retailer will post its biggest quarterly
operating profit in seven years.

The Topix increased 1.5 percent to 1,150.70 at the close in
Tokyo, with volume 37 percent below the 30-day average. All but
one industry group advanced. The gauge climbed 7.6 percent over
the past three trading days, the most since April 8. The Nikkei
225 Stock Average gained 1.3 percent to 13,852.50.

“Foreign investors will buy Japanese stocks as long as the
yen remains weak, because earnings are good,” said Ichiro Yamada, general manager of equities who oversees about $3
billion at Fukoku Mutual Life Insurance. “There’s no doubt
conditions are good for stocks.”

The Topix climbed 47 percent in the nine months through
June, its biggest three-quarter gain in more than 40 years, amid
optimism Japan may beat deflation and achieve sustainable
growth. The gauge has fallen 9.8 percent since an almost five-year high on May 22, paring this year’s gain to 34 percent.

Volatility Continues

The Topix has swung an average of about 3 percent daily
since May 22. The gauge’s 30-day historic volatility closed at
42.79 today, its highest since the 2011 earthquake and tsunami.

Stocks gained as the yen fell against all of its 16 major
counterparts, touching 99.54 per dollar, the lowest since June
5. A weaker yen increases the value of Japanese exporters’
overseas profits when repatriated.

Mazda rose 4.9 percent to 410 yen. Sony Corp. (6758), an
electronics maker that generates 68 percent of sales overseas,
gained 2.7 percent to 2,133 yen. Toshiba Corp. (6502), which gets 18 of
revenue in North America, added 2.1 percent to 487 yen.

Shares also climbed after the quarterly Tankan (JNTSMFG) index showed
positive sentiment among large manufacturers for the first time
since September 2011. The gauge rose to plus four in June from
minus eight in March, the Bank of Japan said in Tokyo today. A
positive figure means optimists outnumber pessimists. The median
estimate of 22 economists in a Bloomberg survey was for a plus
three reading.

China PMI

Companies in the survey forecast the yen to average 91.20
per dollar in the fiscal year ending March 2014, compared with a
projection of 85.22 in the previous report.

Stocks earlier erased gains as data showed manufacturing in
China expanded at the slowest pace in four months in June after
a cash squeeze reduced the flow of credit to companies. The
Purchasing Managers’ Index was at 50.1, down from 50.8 in May,
the National Bureau of Statistics and China Federation of
Logistics & Purchasing said today.

Hisamitsu Pharmaceutical jumped 6.4 percent to 5,360 yen
after the U.S. Food and Drug Administration said June 28 it
cleared a drug for easing hot flashes made by the company’s
Noven unit. The treatment, to be called Brisdelle, is the first
approved non-hormonal alternative for helping women avoid
sweating and feverish feelings linked to menopause.

Aeon added 2.3 percent to 1,332 yen, the highest since May
15. The Nikkei said the retailer would post operating profit of
about 34.5 billion yen ($347 million) in the March-May quarter.

Brokerages Jump

Brokerages gained the most among the Topix’s industry
groups, climbing 3.6 percent to its highest since June 12.
Nomura Holdings Inc., Japan’s biggest securities firm by market
value, rose 2.6 percent to 750 yen. Osaka-based Kosei Securities (8617)
surged 14 percent to 283 yen. Iwai Cosmo Holdings Inc. (8707), also
from Japan’s second-largest city, soared 11 percent to 1,273
yen.

A gauge tracking energy explorers was the only Topix group
that fell. Inpex Corp., which accounts for 83 percent of the
subgroup, lost 0.5 percent to 41,200 yen.

The Topix will rise to 1,270 by year-end, according to 18
analysts surveyed by Bloomberg News. It’s the first time the
median estimate has fallen since the rally in Japanese equities
began in mid-November.

The gauge traded at 14.5 times average estimated earnings,
compared with 14.6 for the Standard & Poor’s 500 Index and 12.6
for the Stoxx Europe 600 Index.

Futures on the S&P 500 rose 0.6 percent ahead of U.S.
manufacturing data due today. The Institute for Supply
Management’s factory index probably rose to 50.5 in June from 49
in May, which was the lowest since June 2009. A reading over 50
indicates expansion. The gauge fell 0.4 percent on June 28.

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