By Masaki Kondo
Jan. 7 (Bloomberg) -- Japan’s stocks rose after President- elect Barack Obama said the U.S. will run deficits for years to keep the economy afloat, lifting speculation government spending will boost demand for Japanese products.
Canon Inc., which gets a third of its sales from the Americas, jumped 11 percent on expectations Obama’s plan to cut taxes will boost spending in the world’s largest economy, and as the yen fell for the sixth day against the dollar. Fuji Heavy Industries Ltd., an automaker that makes 65 percent of its sales overseas, soared 19 percent. Mitsui & Co., which derives more than half its profit from commodities, leapt 6.4 percent as metal prices climbed to a one-month high in London.
The Nikkei 225 Stock Average added 182.31, or 2 percent, to 9,263.15 at the 11 a.m. break in Tokyo, rising for the seventh- straight day, and set for the longest winning streak since April 2006. The broader Topix index added 14.49, or 1.7 percent, to 890.69, with more than two stocks gaining for each that fell.
“One of the few investment themes we have in 2009 is public spending by governments globally,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which manages about $96 billion. “The gains in stocks ease pessimism among investors and prompt them to buy.”
The Nikkei tumbled a record 42 percent last year as the collapse of the American mortgage market dragged Japan, the U.S. and Europe into their first simultaneous recessions since World War II. Yesterday, stocks included in the benchmark traded at 17.1 times their estimated earnings for this fiscal year, almost doubling from a low of 9.5 times on Oct. 27, when the Nikkei plunged to a 26-year low.
Bank Capital
Consumers in the U.S., the single biggest market for Japanese exports, are increasingly reluctant to spend as the yearlong recession raises the likelihood of more job losses. Sony Corp. President Ryoji Chubachi yesterday said the company’s annual sales target for flat-display televisions will be “tough to reach.” Sony derives a quarter of its sales from the U.S.
Obama, who takes office on Jan. 20, yesterday said he expects to inherit a $1 trillion budget deficit and that similar shortfalls are in store “for years to come.” He’s pushing for tax cuts worth $500 for individuals, according to a House Democratic aide, and his economic stimulus plan includes spending on clean-energy development such as solar power and the largest infrastructure investment since the 1950s.
‘Few’ Investment Themes
Canon, the world’s biggest digital-camera maker, extended its gain to a fourth day, rising 11 percent to 3,300 yen. Fuji Heavy, the maker of Subaru cars, soared 19 percent to 292 yen, the sharpest advance since Oct. 14.
Sharp Corp., the world’s second-largest solar-battery maker, leapt 11 percent to 882 yen after the Asahi newspaper reported today the company will start producing solar panels at its Sakai factory in October, ahead of its originally planned 2010 date. Makers of electronics and cars contributed the most to the Topix’s gain.
The Japanese currency depreciated to as much as 94.63 yesterday, the weakest level since Dec. 1, from 93.15 at the close of Tokyo stock trading. It was the sixth day of declines. A 1 yen change against the dollar alters Canon’s annual operating profit by 2.6 billion yen ($28 million), the company said in October. A weaker yen increases the value of overseas sales when revenue is repatriated.
Mitsui, Japan’s second-biggest trading company by market value, climbed 6.4 percent to 1,032 yen, while market leader Mitsubishi Corp. added 4.3 percent to 1,394 yen. JFE Holdings Inc., the world’s third-largest steelmaker, rose 6.2 percent to 2,735 yen. Komatsu Ltd., the second-biggest maker of earthmoving equipment, jumped 3.9 percent to 1,300 yen.
A measure of six metals traded in London jumped 4.6 percent yesterday to the highest level since Dec. 1. Copper futures for March delivery jumped 8.5 percent in New York yesterday, the most since Dec. 8, amid speculation the U.S. spending package will lift demand for materials.
Nikkei futures expiring in March added 2.4 percent to 9,290 in Osaka and gained 2 percent to 9,285 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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