Japan Stocks Gain on BOJ Plan to Ease Credit Risk; Nomura Jumps

By Masaki Kondo

Dec. 22 (Bloomberg) -- Japan stocks rose, led by financial companies, on speculation the central bank’s plan to buy corporate debt will ease credit risk and reduce bankruptcies.

Mizuho Financial Group Inc., which had more than halved its profit target on bad-loan costs, climbed 4 percent after the Bank of Japan said on Dec. 19 it would buy commercial paper to unfreeze credit markets. Nomura Holdings Inc., the nation’s biggest brokerage, jumped 7.6 percent after Barron’s said profits from its Lehman Brother Holdings Inc. assets may drive share gains. Canon Inc. and Honda Motor Co. advanced after the yen weakened to a five-day low, lifting the value of overseas sales.

“The central bank’s proposal of buying commercial paper is helping financials rally,” said Mitsushige Akino, who oversees the equivalent of $468 million at Tokyo-based Ichiyoshi Investment Management. “The measure is expected to reduce bankruptcies and credit risk.”

The Nikkei 225 Stock Average climbed 135.26, or 1.6 percent, to close at 8,723.78 in Tokyo. The broader Topix index advanced 14.29, or 1.7 percent, to 848.72, with more than two stocks rising for each that fell. The value of stocks traded in Tokyo was the lowest since Dec. 1 and was 40 percent less than the average in the past six months.

The Nikkei has lost 43 percent in 2008, set for its worst year on record, as the financial crisis dragged the world’s biggest economies into recession. Shares on the gauge trade at 15.8 times next year’s estimated earnings, making them pricier than 13.2 for the Dow Jones Industrial Average in the U.S. and 8.7 for Europe’s Dow Jones Stoxx 600 Index.

Developer Bankruptcies

The Bank of Japan cut its benchmark interest rate on Dec. 19 for the second time since October and pledged to buy commercial paper from financial companies to relieve credit risk at lenders and easing fund-raising for companies. Last week, condominium builder Dia Kensetsu Co. became the 33rd listed Japanese company to go bankrupt in 2008, extending a post-World War II record for annual failures, according to researcher Teikoku Data Bank Co.

Mizuho, Japan’s second-listed bank, added 4 percent to 270,200 yen, while market leader Mitsubishi UFJ Financial Group Inc. rose 2.9 percent to 576 yen. Sompo Japan Insurance Inc., for which domestic bonds and stocks comprise more than half of its assets, soared 9.2 percent to 606 yen, the most since Nov. 25.

Nomura advanced 7.6 percent to 752 yen, the highest close since Nov. 18. The brokerage’s stock may climb as much as 30 percent if its purchase of Lehman Brothers units in Asia and Europe helps boost earnings, Barron’s said in its Dec. 22 issue.

Exports Plunge

The recession in developed nations is spilling into emerging markets, leaving little hope for makers of cars and electronics to offset plunging U.S. sales. Japan’s exports tumbled 26.7 percent in November from a year earlier, the most on record, the finance ministry today said. Shipments to Asia fell 27 percent, the most in two decades, while those to the U.S. plunged an unprecedented 34 percent.

The yen depreciated to as much as 90.23 against the dollar today, the weakest level since Dec. 16. The U.S. government’s emergency loans to General Motors Corp. and Chrysler LLC eased concern the automakers will collapse and drag the country into a deeper recession, boosting confidence in the dollar.

Honda, Japan’s second-biggest automaker, leapt 5.4 percent to 1,905 yen, breaking a four-day losing streak, while Nissan Motor Co. rose 2.7 percent to 304 yen. Canon, the world’s largest digital-camera maker, climbed 3.7 percent to 2,815 yen. A 1 yen change against the dollar alters Canon’s annual operating profit by 2.6 billion yen ($28.9 million), the company said in October.

Inpex Corp., Japan’s largest oil and gas explorer, advanced 3.9 percent to 609,000 yen, erasing an early decline after crude oil rose as much as 2.6 percent in New York. A gauge including Inpex and other energy explorers posted the second-sharpest leap among 33 industry groups on the Topix, following brokerages.

Nikkei futures expiring in March added 1.6 percent to 8,740 in Osaka and gained 1.5 percent to 8,705 in Singapore.

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