Japan Stocks Rise, Led by Banks After Kamei Comments on Capital

By Akiko Ikeda and Kana Nishizawa

Nov. 10 (Bloomberg) -- Japanese stocks rose, led by banks after Financial Services Minister Shizuka Kamei said the government is willing to tolerate domestic banks “briefly” falling below capital ratios to ensure the supply of credit.

Mitsubishi UFJ Financial Group Inc., the country’s biggest bank by market value, gained 2.7 percent, and Sumitomo Mitsui Financial Group Inc. added 3.6 percent. Bank shares spiked this morning after the minister’s comments and were the biggest contributors to gains in the Topix index at the close of trading. Casio Computer Co. climbed 4.4 percent after Citigroup Inc. boosted its investment rating on the maker of G-Shock watches.

“Kamei’s comments gave some breathing room to domestic banks, which were bound by the capital requirements,” said Masaru Hamasaki, a strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “They’re giving a sense of relief to the market.”

The Nikkei 225 Stock Average rose 0.6 percent to 9,870.73 at the close of trading in Tokyo. The broader Topix added 0.2 percent to 872.44, with nine stocks advancing for every seven that retreated.

The Topix fell 0.4 percent yesterday, the only benchmark gauge among the world’s 20 largest stock markets to decline. Shares in the index trade at 36 times estimated earnings on average, compared with 20 at the beginning of the year.

In New York yesterday, the Standard & Poor’s 500 Index advanced 2.2 percent for its sixth straight increase, led by financial companies, after the Group of 20 agreed to maintain economic stimulus measures.

Banks Lead Advance

Mitsubishi UFJ climbed 2.7 percent to 503 yen and was the most-actively traded stock by value in Japan. Sumitomo Mitsui Financial Group added 3.6 percent to 3,170 yen. Mizuho Financial Group Inc. increased 1.1 percent to 178 yen.

Local banks that use domestic accounting standards won’t be punished if their capital-adequacy ratios slip below 4 percent for a limited period of time, Kamei told reporters in Tokyo today. The minister said his focus is on making sure banks continue lending.

The country’s largest banks use international standards and are required to keep their capital-adequacy ratios, a key measure of financial strength, above 8 percent.

Casio jumped 4.4 percent to 706 yen, the biggest gain since Aug. 28. The maker of watches and calculators had its rating raised to “hold” from “sell” by Kota Ezawa at Citigroup.

Hoya Corp., Japan’s largest maker of optical glass, rose 1.2 percent to 2,170 yen, its highest close since Sept. 24, after Ryohei Takahashi, an analyst at Bank of America Corp.’s Merrill Lynch unit, boosted his rating to “buy” from “underperform” and increased a 12-month share price estimate by 43 percent to 2,500 yen.

Dainippon Screen Manufacturing Co. advanced 7.8 percent to 385 yen, its sharpest advance since Oct. 7. The maker of chip- equipment narrowed its forecast full-year net loss to 12 billion yen from 15 billion yen, as orders from makers of semiconductors and liquid-crystal display panels begin to rise.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.