Japan’s Topix Index Rises to Post Highest Close Since January

Jun 18, 2014 2:40 am ET

June 18 (Bloomberg) -- Japan’s Topix index rose for a second day, posting its highest close in more than four months, as the yen held losses and investors awaited a Federal Reserve decision on monetary policy. Brokerages led gains.

Nintendo Co., which counts the Americas as its biggest market for sales, advanced 2.1 percent. Nomura Holdings Inc., Japan’s largest securities company, climbed 2.3 percent. Nikon Corp. sank the most on the Nikkei 225 Stock Average after the camera maker’s rating was cut at JPMorgan Chase & Co.

The Topix added 0.9 percent to 1,249.15 in Tokyo, its highest close since Jan. 29. Three shares climbed for each that fell, with volume about 6.1 percent lower than the 30-day average. The Nikkei 225 increased 0.9 percent to 15,115.80. Japan’s currency slid 0.1 percent to 102.27 per dollar after falling 0.3 percent yesterday.

“The yen has moved in a positive direction for Japanese stocks,” said Kenichi Hirano, an analyst at Tachibana Securities Co. “But we may be surprised by the Fed’s decision, so it’s hard to take much action before that.”

Futures on the Standard & Poor’s 500 Index were little changed today. The measure rose 0.2 percent yesterday as smaller companies rallied.

The Fed will conclude a two-day policy meeting in Washington today. The Federal Open Market Committee will reduce the pace of monthly asset purchases by $10 billion to $35 billion, analysts project. Some 62 percent of 58 economists in a Bloomberg survey predict the Fed will halt bond buying at its October meeting.

Exporters Advance

Exporters rose today, with consumer-electronics makers providing the biggest boost to the Topix. Nintendo, which makes video-game consoles, climbed 2.1 percent to 12,340 yen. Toyota Motor Corp., the world’s biggest carmaker, rose 1.1 percent to 5,884 yen.

The Topix Securities Index gained 2 percent, the most among the 33 industry groups on the broader gauge. Nomura advanced 2.3 percent to 728 yen. Daiwa Securities Group Inc., Japan’s second- biggest brokerage, added 2 percent to 870 yen.

“Investors will be watching to see if the Fed signals hawkishness, in which case initially U.S. stocks will fall and then Japanese shares will drop along with them,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. “But in the long term, it means an exit from zero interest rates in the U.S., which will weaken the yen and boost Japanese shares.”

Japan’s exports fell in May for the first time in 15 months on weak demand from the U.S. and Asia. Outbound shipments decreased 2.7 percent from a year earlier, the finance ministry said today, steeper than the median forecast for a 1.3 percent decline in a Bloomberg News survey of 29 economists. Imports dropped 3.6 percent, with the trade deficit narrowing to 909 billion yen ($8.9 billion) from a year earlier.

Structural Issues

“The data suggests there are some structural issues at play,” Daiwa SB’s Monji said. “Maybe the weak export numbers are because of Japan lacking competitiveness abroad. It’s negative for the market.”

Nikon sank 2.6 percent to 1,616 yen. JPMorgan reduced its rating on the stock to underweight from neutral, citing high costs and downside risks to existing businesses in the camera maker’s plans to increase its medical business sales.

Even after a 8.6 percent rebound from its May 21 low, the Topix is still the worst performer this year among 24 developed markets tracked by Bloomberg. The measure capped a world-beating rally last year as the central bank pressed ahead with record monetary easing.

The gauge traded at 1.2 times book value today, compared with 2.7 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index yesterday.