Japanese Stocks Climb, Led by Shippers on Rates; Ulvac Soars

By Patrick Rial

Aug. 15 (Bloomberg) -- Japanese stocks advanced, paring a weekly loss, after freight rates soared the most in almost seven months, boosting the earnings prospects of shipping lines.

Kawasaki Kisen Kaisha Ltd. led a gauge of shippers to a two- week high amid speculation China's appetite for commodities will cause transportation demand to rebound. Ulvac Inc., a maker of semiconductor equipment, soared the most in two years after saying profit is likely to double. Central Japan Railway Co. led train operators lower after Mizuho Securities Co. cut its rating.

``Pessimism has been excessive and drove shipping companies well below where they ought to be trading,'' said Hiromichi Tsuyukubo, a hedge-fund manager in Tokyo at Myojo Asset Management Japan Co., which oversees $200 million. ``People are scared about how bad it's going to get, but at some point the valuations start to matter.''

The Nikkei 225 Stock Average gained 62.61, or 0.5 percent, to 13,019.41 at the close of trading in Tokyo. The broader Topix index climbed 8.38, or 0.7 percent to 1,247.31. Two shares advanced for every two that fell on the Topix. For the week, the Nikkei lost 1.1 percent, while the Topix declined 1 percent, a third-straight weekly loss.

The value of shares traded on the main board of the Tokyo Exchange was 1.59 trillion yen ($14.4 billion) today, the lowest for a full day this year as many investors took off during Japan's Obon holiday season.

Shipper Rebound

The Baltic Dry Index of freight costs for commodities posted its biggest gain since Jan. 30 on speculation Chinese demand for raw materials will increase after the Olympics, improving the outlook for shipping lines that carry the goods. The benchmark had slumped for 23 consecutive days up to Aug. 13.

Kawasaki Kisen, the country's third-biggest shipping line, surged 4.9 percent to 809 yen, while No. 2 Mitsui O.S.K. Lines Ltd. climbed 2.8 percent to 1,323 yen, bringing this week's gain to 10 percent. Domestic leader Nippon Yusen K.K. gained 3.1 percent to 900 yen.

The Topix Marine Transportation Index slumped 29 percent from its May 20 high on the year to the end of last week, the worst decline among the broader gauge's 33 industry groups.

Ulvac, a maker of vacuums and etching equipment used in semiconductor production, soared 13 percent to 3,480 yen, the sharpest gain since August 2006. The company forecast profit will double this year as sales climb by a quarter.

Nikon Corp., which also makes chip-etching machines, rose 3.8 percent to 3,600 yen, the highest since Jan. 4, while Elpida Memory Inc., Japan's largest memory chipmaker, jumped 6.3 percent to 2,795 yen.

Zecs Viability

Chip-related companies also gained after the trade journal EE Times said yesterday SanDisk Corp., the biggest maker of memory cards for digital cameras, may be acquired by Seagate Technology, the world's biggest maker of hard-disk drives. The report boosted confidence profitability in the industry will be improved by consolidation.

JR Central dropped 2 percent to 1.091 million yen after Mizuho analyst Satoru Kunieda lowered the company to ``hold'' from ``buy.'' The analyst also cut target prices on East Japan Railway Co. and West Japan Railway Co., which fell 0.6 percent and rose 1.2 percent respectively.

Urban Corp., the property developer that this week became Japan's biggest bankruptcy case in six years, slumped 82 percent to 6 yen, bringing its loss this year to more than 99 percent. Rival Zecs Co. plunged by its daily limit of 1,000 yen, or 13 percent, to 6,660 yen after it said yesterday there are doubts it can remain as a viable business.

``The reduction in liquidity stems from the credit crunch,'' Masahiro Mochizuki, a property analyst at Credit Suisse Group in Tokyo, wrote in a note to clients. ``There is now a strong possibility that at some companies we will see greater valuation losses than initially expected.''

Nikkei futures expiring in September added 0.6 percent to 13,030 in Osaka and advanced 0.6 percent to 13,040 in Singapore.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.