By Akiko Ikeda and Masaki Kondo
Oct. 26 (Bloomberg) -- Japanese stocks rose on speculation Chinese infrastructure spending will fuel growth for the rail industry and as earnings reports added to evidence companies are rebounding from the recession.
Kawasaki Heavy Industries Ltd. and Nippon Sharyo Ltd. gained more than 4 percent after the Nikkei newspaper said Japanese trainmakers will benefit from licensing fees and equipment orders. Toyota Industries Corp. climbed 7.4 percent after the car assembler posted a profit. Nippon Express Co. soared 10 percent after saying it will sell a unit, prompting at least three brokerages to boost their investment ratings.
The Nikkei 225 Stock Average rose 0.8 percent to 10,362.62 at the close of trading in Tokyo. The broader Topix index gained 1 percent to 910.72, as more than three stocks advanced as retreated.
“Companies’ desperate efforts to cut costs have resulted in a lower break-even point, and we’re about to see these positive effects in coming earnings reports,” said Hisakazu Amano, who helps oversee the equivalent of $19 billion at T&D Asset Management Co. “The scale of emerging economies has become significantly larger and there’s still room for personal consumption to grow.”
Kawasaki Heavy jumped 4.4 percent to 240 yen, its biggest increase since Aug. 13. Toyo Electric Manufacturing Co., which makes parts such as inverters for train cars, advanced 4.9 percent to 859 yen. Nippon Sharyo Ltd., which produces rolling stock, climbed 5.6 percent to 606 yen. A measure of trainmakers in the Topix had the biggest gain among the index’s 33 industry groups.
‘Brisk Auto Sales’
China has allotted 45 billion yuan ($6.6 billion) for high- speed rail cars, some of which will go to Japanese companies supplying technology and parts to Chinese manufacturers, the Nikkei newspaper reported.
Toyota Industries climbed 7.4 percent to 2,530 yen. The maker of cars and car parts posted net income of 200 million yen for the six months ended Sept. 30, exceeding its projection of a 9.5 billion-yen net loss, helped by government measures to boost demand for vehicles.
“We believe the upward revision was attributable to brisk sales in the auto-parts segment” and cost cuts overseas, Arifumi Yoshida, an analyst at Citigroup Inc., said in a note to clients. “Toyota Industries’ revisions to guidance have also raised expectations about results announcements from Toyota- affiliates scheduled for next week.”
Futaba Industrial Co., a muffler maker, added 3.9 percent to 486 yen. NGK Spark Plug Co. rose 6.4 percent to 1,042 yen.
Nippon Express Soars
Nippon Express soared 10 percent to 382 yen, the most since January 2000 and the sharpest advance in the Nikkei 225. The delivery company said on Oct. 23 after the market closed that it had cut its stake in JP Express, an unprofitable venture with Japan Post Holding Co., to 14 percent from 34 percent.
“We now believe the company’s ROE outlook for the next three years will improve,” Yasuhito Tsuchiya, an analyst at Bank of America Corp.’s Merrill Lynch & Co., wrote in a report. ROE refers to return on equity. Tsuchiya raised the shares to “neutral” from “underperform.”
Analysts at Mitsubishi UFJ Financial Group Inc. and Deutsche Bank AG also boosted their recommendations on the stock.
Chiyoda Corp. plunged by the daily limit of 100 yen, or 13 percent, to 694 yen, the sharpest decline in the Nikkei. The plant-engineering company slashed its full-year net income outlook by 60 percent because of project delays.
Acom Co., a consumer lender, fell 4 percent to 1,282 yen, the lowest since the stock went public in October 1993. The company said fiscal first-half net income was 85 percent less than forecast on interest-refund costs and reserves for possible loan losses. Acom had its 12-month share-price estimate slashed to 706 yen from 1,240 yen by Takehiro Tsuda, an analyst at Citigroup Inc.
K’s Holdings Corp., a chain of home-appliance stores, climbed 6.3 percent to 3,020 yen after raising its forecast for annual net income. DIC Corp. advanced 10 percent to 143 yen, the steepest advance since Oct. 28, 2008, after the maker of chemicals narrowed its forecast for a full-year net loss.
To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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