Japan’s Topix Rebounds After Weekly Decline as G-20 Quiet on Yen – Bloomberg

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