Japan Stocks Rise on Weaker Yen; Developers Fall on Bankruptcy

By Masaki Kondo

Feb. 6 (Bloomberg) -- Japan stocks rose, extending the Nikkei 225 Stock Average’s second-straight weekly advance, as the weaker yen lifted the earnings prospects for makers of cars and electronics.

Honda Motor Co., which gets more than half its sales from North America, jumped 3.2 percent after the yen fell to a one- month low. Olympus Corp., a camera maker that counts Europe as its biggest overseas market, soared 4 percent. Mitsui Fudosan Co., Japan’s No. 1 developer, sank 3.8 percent after a smaller peer’s bankruptcy highlighted funding concerns for the industry.

The Nikkei 225 climbed 152.70, or 1.9 percent, to 8,102.35 as of 9:56 a.m. in Tokyo, while the broader Topix index rose 7.64, or 1 percent, to 794.05. The Nikkei was set for a 1.4 percent gain this week, while the Topix was poised to end the week little changed.

“The yen’s depreciation is something investors are pleased with, because the stronger local currency is one of the main reasons Japanese companies have had to cut forecasts,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television.

More than half of Japanese companies that have reported third-quarter results cut full-year profit forecasts, according to Tokyo-based Shinko Research Institute Co, in part because of the stronger yen. Canon Inc., which is expecting 160 billion yen ($1.7 billion) in profit this year, loses 9.1 billion yen for every 1 yen gain against the dollar.

Dollar, Euro

Honda, Japan’s second-biggest automaker, jumped 3.2 percent to 2,240 yen, while Toyota Motor Corp., the world’s No. 1, added 2.3 percent to 3,110 yen. Canon, which earns a third of its sales from the Americas, rose 3.5 percent to 2,525 yen. Makers of cars and electronics contributed the most to the Topix’s advance.

The yen depreciated to as much as 92.25 against the dollar yesterday, the weakest since Jan. 8, from 89.28 at the close of stock trading in Tokyo, while falling versus the euro to much as 118.89 from 114.67. A weaker yen boosts the value of overseas sales of Japanese companies. Today, the yen traded at 90.90 against the dollar and 116.28 versus the euro.

Olympus, the world’s top endoscope maker, soared 4 percent to 1,497 yen. Konica Minolta Holdings Inc., a camera maker that gets 29 percent of its overseas sales in Europe, added 3.8 percent to 773 yen.

Mitsui Fudosan sank 3.8 percent to 1,248 yen, and Mitsubishi Estate Co. Real-estate shares were the biggest losers among 33 industry groups on the Topix.

Bankruptcies Continue

Japan General Estate Co. yesterday filed for bankruptcy as a lack of collateral prevented the developer from securing funding. It’s shares went untraded as orders to sell overwhelmed bids. Of six publicly traded companies that have filed for bankruptcy in Japan this year, three were in the real estate sector.

The collapse of the U.S. mortgage market triggered more than $1 trillion on credit losses and writedowns at global financial companies and tipped the world’s biggest economies into recession. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.

Nikkei futures expiring in March added 2.3 percent to 8,110 in Osaka and gained 2.1 percent to 8,100 in Singapore.

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