Japan’s Topix Heads for Longest Win Streak Since 1990 on Sony

By Masaki Kondo

July 31 (Bloomberg) -- Japanese stocks rose, lifting the Topix index toward its longest winning streak in two decades, as earnings results at Sony Corp. and Mitsui Fudosan Co. boosted investor confidence in the prospects for corporate profits.

Sony, maker of the PlayStation 3 game machine, climbed 5.4 percent. Mitsui Fudosan, Japan’s largest property developer, gained 5.6 percent after reporting first-quarter profit more than doubled. Nintendo Co., maker of the Wii game console, sank 5.4 percent in Osaka trading after sales fell more than expected. Investors shrugged off government reports that showed rising unemployment and a record drop in consumer prices.

“An earnings and economic recovery in the second half was rather like a wishful thought,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $90 billion. “That’s getting more likely now and increasing investors’ appetite for risk assets.”

The Nikkei 225 Stock Average climbed 180.93, or 1.8 percent, to 10,346.14 as of 12:57 p.m. in Tokyo, en route for its highest close since Oct. 6. The broader Topix rose 12.51, or 1.3 percent, to 949.45, set for an 11th day of gains, the longest stretch since May 1990.

The Nikkei and Topix are set for fifth monthly gains, the longest streak since January 2006, as better-than-anticipated results from Japanese and U.S. companies boosted investor confidence. For the week, the Nikkei is poised for a 4 percent climb, and the Topix is set to add 3.1 percent.

Sony’s Loss

Sony, which plans to cut 16,000 jobs by March 31, rose 5.4 percent to 2,640 yen. The company reported a first-quarter net loss that was less than half analysts’ estimates. Cost reductions helped narrow the loss at Sony’s television business and the recovery in Japan’s stock market lifted operating profit at the manufacturer’s financial unit.

Nomura raised Sony to “buy” from “neutral,” citing higher earnings prospects.

Mitsui Fudosan climbed 5.6 percent to 1,749 yen. Net income more than doubled to 16.1 billion yen ($169 million) in the three months to June 30 as housing sales and revenue from new shopping malls increased, the company said.

Sumitomo Realty & Development Co., which is scheduled to announce earnings next week, soared 6.9 percent to 1,958 yen. Real-estate companies as a group were the biggest winners among the 33 industry groups tracked on the Topix.

“Those earnings reports are reflecting a gap among companies in the degree of their efforts to ride out the recession by cutting costs and cultivating customers,” Daiwa Asset’s Nagano said. “If many businesses try to eke out profits by cutting costs, it may deepen an economic slump.”

Unemployment, Deflation

The nation’s jobless rate jumped to 5.4 percent in June, a level not seen since June 2003, a statistics bureau report showed today. Prices excluding fresh food declined 1.7 percent from a year earlier last month, the sharpest since the survey began in 1971, according to a separate report from the bureau.

Nintendo tumbled 5.4 percent to 25,370 yen in Osaka trading. The game maker said first-quarter net income plunged 61 percent. Sales fell 40 percent to 253.5 billion yen, a fifth lower than analysts’ estimates.

Mazda Motor Corp., the world’s only mass producer of rotary engines, sank 4.2 percent to 253 yen. The automaker had a third consecutive quarterly loss, with sales falling 45 percent.

Nikkei futures expiring in September added 1.5 percent to 10,350 in Osaka and gained 1.4 percent to 10,350 in Singapore.

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