Japanese Stocks Advance on Elpida Earnings, Analysts

By Masaki Kondo and Patrick Rial

Oct. 15 (Bloomberg) -- Japanese stocks gained after Elpida Memory Inc.’s earnings and brokerage upgrades at electronics makers boosted speculation demand for products is picking up.

Elpida, Japan’s biggest maker of computer memory-chips, gained 2.9 percent. Panasonic Corp., the world’s largest maker of plasma televisions, gained 3 percent after JPMorgan Chase & Co. lifted its view on Japan’s electronics industry to “bullish.” Nippon Steel Corp. added 3.1 percent after South Korean rival Posco boosted its profit forecast.

“I’m bullish on Japanese equities,” said Masayuki Kubota, a senior fund manager at Daiwa SB Investments Ltd., which manages the equivalent of $38 billion in Tokyo. “Manufacturing is recovering significantly and the business environment for Japanese companies is improving.”

The Nikkei 225 Stock Average rose 1.8 percent to close at 10,238.65 in Tokyo, and the broader Topix index added 1.1 percent to 904.11, with more than twice as many stocks rising as falling. Both gauges climbed to their highest this month.

Elpida climbed 2.9 percent to 1,260 yen, after surging as much as 6.3 percent. The company posted operating profit in the three months to Sept. 30 because a recovery in demand triggered a “substantial” increase in memory prices. It was the company’s first operating profit in eight quarters.

“A turnaround in major electronics markets should lead to improved sentiment,” Yoshiharu Izumi, a JPMorgan analyst, wrote in a report yesterday. “Of the consumer electronics companies, we like Panasonic the most, followed by Sony and then Sharp.” Izumi raised his view on Japan’s electronics industry from “neutral.”

Panasonic, Sony, Sharp

Panasonic climbed 3 percent to 1,267 yen, and Sony Corp., the maker of the Vaio personal computer, advanced 3.6 percent. Sharp Corp., Japan’s biggest maker of liquid-crystal displays, rose 3 percent after Barclays Capital upgraded the stock to “equal weight” and South Korean rival LG Display Co. reported that profit almost doubled in the third quarter.

“The business climate is improving for the high-tech industry,” said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “Demand is robust, especially in China, for products such as sophisticated mobiles” and inexpensive laptop computers.

Gains in U.S. equities gave an extra boost to the Japanese market as the Standard & Poor’s 500 Index added 1.8 percent yesterday to the highest since October 2008. A Commerce Department report showed retail sales fell less than economists had estimated in September.

Nippon Steel, the world’s No. 2 steelmaker, rose 3.1 percent to 365 yen after HSBC Holdings Plc, raised the shares to “neutral” from “underweight.” JFE Holdings Inc., Japan’s second-biggest steelmaker, gained 2.1 percent and smaller competitor Kobe Steel Ltd. advanced 3 percent.

Posco lifted its operating profit forecast for 2009 by 23 percent yesterday. Global steel demand will increase in 2010 as orders from industries including automakers and builders improve, the company said. The World Steel Association said on Oct 12. that global demand will rebound 9.2 percent next year.

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