Japan Stocks Advance on Global Stimulus Plans; Komatsu Gains

By Masaki Kondo

Nov. 10 (Bloomberg) -- Japanese shares rose for the first time in three days, led by machinery and shipping companies, after China announced a stimulus plan worth almost a fifth of its economy, joining global efforts to stave off a recession.

Komatsu Ltd. and Hitachi Construction Machinery Co., Asia's largest makers of earthmovers, soared more than 11 percent after China pledged part of a 4 trillion-yuan ($586 billion) spending package to improve infrastructure. Nippon Yusen K.K., Japan's biggest shipping line, jumped 9.9 percent after the Group of 20 nations called for interest-rate cuts and higher government spending. Sony Corp. rose 7.6 percent after the yen weakened.

The Nikkei 225 Stock Average added 498.43, or 5.8 percent, to close at 9,081.43 in Tokyo. The broader Topix index rose 37.65, or 4.3 percent, to 916.65, with all its 33 industry groups gaining. The value of shares traded on the bourse was three- fourths the six-month average and the lowest level since Sept. 1.

``China's stimulus plan can shore up the nation's economy and soothe concern among investors that the global slowdown will worsen,'' said Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co. ``Machinery makers, shippers and commodity stocks have been oversold. If you're not overly pessimistic on the global economy, their prices are low enough to buy in for long-term returns.''

China's State Council yesterday announced a stimulus plan equivalent to almost a fifth of last year's gross domestic product, ranging from tax breaks on equipment to infrastructure spending. The same day, the Group of 20 nations, which includes China, said it's ready to act ``urgently'' to bolster growth.

Chinese Infrastructure

Japanese machinery orders rose 5.5 percent in September, more than the 5.2 percent predicted by economists, in what the Cabinet Office today called a ``weak rebound.'' For the quarter, the decline in orders matched a record, as the slowing global economy dragged on exports. The Nikkei has fallen 41 percent this year and is coming off its worst month ever.

Komatsu, which counts China as its fastest growing market, leapt 12 percent to 1,254 yen, while smaller rival Hitachi Construction Machinery soared 19 percent to 1,252 yen, making it the biggest winner on the MSCI World Index. Kawasaki Heavy Industries Ltd., which makes Japanese bullet trains, surged 14 percent to 211 yen.

China's spending package, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, roads, railways and airports, as well as rural development.

Nippon Yusen jumped 9.9 percent to 500 yen, while closes rival Mitsui O.S.K. Lines Ltd. gained 12 percent to 523 yen. A gauge of shipping lines, the worst performer among Topix groups in the year to last week, was today's biggest winner.

Sony, Shionogi

``China's stimulus plan makes it clear that the nation is serious about ensuring stable growth,'' said Yoshihisa Okamoto, a fund manager at Mizuho Asset Management Co., which oversees $26 billion in Tokyo. ``Businesses depending on demand in the country are more likely to avoid a plunge in earnings.''

The spending package reinvigorated investor appetite for riskier assets, causing the yen to weaken against the dollar to as much as 99.37 today from 97.50 at the close of stock trading in Tokyo on Nov. 7. The Japanese currency depreciated against the euro to as much as 127.91 from 124.13. A weaker yen boost the value of Japanese companies' overseas sales.

Sony, an electronics maker that gets a quarter of its sales from the U.S., surged 7.6 percent to 2,345 yen. Canon Inc., the world's biggest digital-camera maker, rose 5.2 percent to 3,440 yen, while Olympus Corp., an endoscope maker that derives the biggest portion of overseas earnings from Europe, added 11 percent to 1,785 yen.

Drugmaker Shionogi & Co. jumped 10 percent to 2,045 yen after a study showed its Crestor pill cut the risk of heart attacks in people with low cholesterol, potentially expanding uses for the treatment.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.