Japan Utilities, Beer Makers Gain; Resource Shares Drop on Oil

By Masaki Kondo

June 22 (Bloomberg) -- Japanese power-generator shares gained as investors sought the safety of companies less affected by economic slowdown. Resource-related stocks declined as oil prices fell the most in two weeks.

Kansai Electric Power Co. advanced 2.6 percent, while Inpex Corp., Japan’s biggest oil driller, dropped 2.7 percent. Kawasaki Kisen Kaisha Ltd., the nation’s No. 3 shipping line, retreated 3.3 percent after commodity transport fees slid. Sapporo Holdings Ltd. surged 17 percent as Credit Suisse Group AG boosted its rating.

The Nikkei 225 Stock Average fluctuated between gains and losses and was up 28.84, or 0.3 percent, to 9,815.10 as of 12:41 p.m. in Tokyo. The broader Topix index rose 2.91, or 0.3 percent, to 921.88, with five stocks advancing for every two that dropped.

“The improvement in the economy is merely a rebound and the level of a recovery is still very low,” said Hiroshi Morikawa, a senior strategist at MU Investments, which manages about $13 billion. Defensive shares have become more attractive as investors “aren’t sure how long a recovery will last.”

Confidence among Japanese manufacturers improved this quarter, the Cabinet Office and Finance Ministry said today. A separate report from the Trade Ministry showed demand for services rebounded in April for the first time in three months.

The Topix has gained 7 percent this year through June 19 on optimism government stimulus measures and looser monetary policies will lift the global economy from recession. John Lipsky, the International Monetary Fund’s first deputy managing director, said on June 19 that the organization expects to raise its world growth forecasts “modestly upward.”

Oil Slump

Kansai Electric climbed 2.6 percent to 2,135 yen, while Tokyo Electric Power Co., Asia’s biggest utility, added 1.4 percent to 2,520 yen. The Topix Electric Power & Gas Index contributed the most to the broader measure’s advance.

Utilities also got a boost as lower oil prices reduced their fuel expenses. Crude oil for July delivery declined 2.6 percent on June 19, the most since June 3. Oil fell as much as 0.7 percent today.

Inpex dived 2.7 percent to 746,000 yen, while closest domestic rival Japan Petroleum Exploration Co. slipped 2.8 percent to 5,130 yen. The Topix Mining Index, which includes the two companies, was the biggest loser among 33 industry groups.

Kawasaki Kisen lost 3.3 percent to 413 yen, after the Baltic Dry Index, a measure of shipping costs for commodities, slid for the first time in seven sessions. Nippon Yusen K.K., Japan’s top shipping line, fell 2.1 percent to 418 yen.

Beer Sales

Sapporo soared 17 percent to 506 yen, making it the biggest winner on the MSCI World Index. Asahi Breweries Ltd. climbed 1.6 percent to 1,379 yen. Credit Suisse lifted its rating on Sapporo to “outperform” and Asahi Breweries to “neutral.” Both had been rated “underperform.”

Beer sales will likely be flat in the year ending in December rather than the decline previously expected, as demand for low-priced brands offsets a drop in restaurant sales, Credit Suisse analyst Yoshiyasu Okihira said in a report dated June 19. Okihira boosted his view on Japan’s beverage industry to “market weight” from “underweight.”

Furniture retailer Nitori Co. jumped 2.9 percent to 6,670 yen. The company increased its net income forecast for the year to Feb. 20 by more than a tenth, saying deeper discounts are attracting customers.

“The market has factored in a possible rebound in the global economy, and investors are reluctant to buy unless companies show resilient earnings like Nitori,” said Masayoshi Yano, a senior market analyst at Meiwa Securities Co. in Tokyo.

Nikkei futures expiring in September added 0.5 percent to 9,820 in Osaka and gained 0.4 percent to 9,815 in Singapore.

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