Japan's Stocks Advance, Led by Real-Estate Companies, Banks

By Makiko Kitamura and Masaki Kondo

July 7 (Bloomberg) -- Japanese stocks rose, set to break the Nikkei 225 Stock Average's longest losing streak in 54 years, as investors swept in to buy shares that had become relatively cheap.

Sumitomo Realty & Development Co. sent developers to their biggest gain in two weeks. Orix Corp., Japan's largest non-bank financial company, rose the most in eight weeks, while Mizuho Financial Group Inc. headed for the sharpest jump in a month.

The Nikkei 225 added 124.71, or 0.9 percent, to 13,362.60 as of 1:57 p.m. in Tokyo, breaking a 12-day slide, the longest since 1954. The broader Topix index rose 13.76, or 1.1 percent, to 1,311.64. Almost two stocks advanced for every one that fell on the Topix.


``Japanese stocks have been sold excessively, and they have become cheap relative to their asset values or earnings,'' said Yoshihiro Ito, senior strategist at Okasan Asset Management Co. in Tokyo, which oversees the equivalent of $9.3 billion.

As of July 4, shares on the Nikkei traded at 16.5 times earnings for the past business year, the lowest since May 13 and below the 20.8 ratio for China's CSI 300 Index, based on Bloomberg data. The Nikkei fell 8.4 percent in the 12 days through July 4, reaching the lowest since April 16.

Sumitomo Realty, Japan's third-biggest developer, soared 4.3 percent to 2,165 yen. Smaller rival Tokyu Land Corp. surged 7.5 percent to 575 yen and Tokyo Tatemono Co. rose 7.3 percent to 591 yen. The stocks were among the biggest winners on the MSCI World Index.

The relative strength index, a moving average based on gains and losses, for a gauge of real-estate shares on the Topix fell to 31.6 on July 4, close to the 30 threshold some traders use as a signal to buy.

Chinese Market

In China, the CSI 300 Index leapt 4.5 percent today, headed for the biggest advance since June 18, after China Merchants Bank Co. and China Citic Bank Corp. said first-half earnings probably more than doubled.

Orix advanced 5.9 percent to 15,480 yen, set for the biggest gain since May 12. Mizuho, the Japanese bank most heavily hit by the collapse of the U.S. mortgage market, rose 4.6 percent to 505,000 yen and was most actively traded on the bourse. Aioi Insurance Co. climbed 4.1 percent to 562 yen.

Developers and financial companies were among the biggest gainers among industry groups on the Topix.

Nikkei futures expiring in September added 0.7 percent to 13,370 in Osaka and gained 0.6 percent to 13,375 in Singapore.

To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.