Monday, 1 July 2013

Japan Stocks Rise Fourth Day on U.S. Manufacturing, Yen

By Yoshiaki Nohara - Jul 2, 2013 7:41 AM GMT+0400
Japanese stocks rose, with the Topix (TPX) index extending the biggest three-day rally in almost three months, as data showed U.S. manufacturing expanded more than expected and the yen traded near a four-week low.
Toyota Motor Corp. (7203), a carmaker that gets 31 percent of sales in North America, increased 1.7 percent. Energy explorers led gains among the 33 Topix subsectors, while auto manufacturers provided the biggest support for the gauge. Tokyo Electric Power Co. (9501), the utility at the center of the 2011 nuclear disaster, rose 7.7 percent on a report it will apply to restart reactors at one of its plants.
Japan Stocks Rise for Fourth Day on U.S. Manufacturing Data, Yen
Visitors look at an electronic board displaying stock figures at the Tokyo Stock Exchange in Tokyo. Photographer: Junko Kimura/Bloomberg
July 2 (Bloomberg) -- Jeffrey Roskell, fund manager at JPMorgan Asset Management in Hong Kong, talks about Asian stocks and his investment strategy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
July 1 (Bloomberg) -- Nicholas Weindling, executive director at J.P. Morgan Asset Management, talks about Japan's stocks and investment strategy Weindling, speaking with Rishaad Salamat on Bloomberg Television's "On the Move," also discusses Japan's economy and government policies. (Source: Bloomberg)
July 1 (Bloomberg) -- Masanaga Kono, senior strategist at Amundi Japan Ltd., talks about the Japanese economy and stocks. Big Japanese manufacturers turned optimistic for the first time since September 2011, indicating confidence in Prime Minister Shinzo Abe’s reflationary policies even after stock market volatility. Kono speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The Topix increased 1 percent to 1,162.36 as of 12:36 p.m. inTokyo, with volume 22 percent below the 30-day intraday average. The gauge climbed 7.6 percent over the past three trading days, the most since April 8. The Nikkei 225 Stock Average added 0.8 percent to 13,966.94.
“The U.S. economy may outperform expectations, but it won’t be perfect all the time and I think they will keep quantitative easing longer,” said Kuninobu Takeuchi, Tokyo-based executive portfolio manager at DIAM Co., which oversees more than $124 billion globally. “Earnings at Japanese companies are likely to beat estimates because their yen forecasts are pretty conservative.”
The Topix fell 9.8 percent as of yesterday from an almost five-year high on May 22. The gauge was still up 34 percent this year through yesterday, amid optimism Japan may beat deflation and achieve sustainable growth.

Most Bullish

Investors using borrowed money to trade Japanese stocks are the most bullish since 2000, signaling expectations the rally will continue. The number of Japanese shares bought through margin accounts that profit when stocks rise outnumbered those that make money during declines by about 7 to 1, the highest for 13 years, data compiled by Bloomberg show.
Futures on the Standard & Poor’s 500 Index rose 0.1 percent today, after the gauge climbed 0.5 percent yesterday. TheInstitute for Supply Management’s manufacturing index increased to 50.9 in June from 49 in May, beating the 50.5 forecast in a Bloomberg survey. A reading above 50 signals expansion. The Federal Reserve said it will probably taper record stimulus this year if the economy meets projections.
The yen touched 99.86 per dollar yesterday, the weakest since June 5. The currency traded at 99.56 today as of 12:40 p.m. in Tokyo. A falling yen boosts the value of overseas earnings at Japanese companies when repatriated.

Yen Forecast

Companies in the Bank of Japan’s Tankan survey, which was released yesterday, 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.
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 has swung an average of about 3 percent daily since May 22 as of yesterday. The measure’s 30-day historic volatility closed at 42.79 yesterday, its highest since the 2011 earthquake. The Topix traded at 14.5 times average estimated earnings as of yesterday, compared with 14.7 for the S&P 500 and 12.8 for the Stoxx Europe 600 Index.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at
To contact the editor responsible for this story: Nick Gentle at