Japan Stocks Rise, Led by Automakers as Yen Weakens; Aeon Gains

By Kana Nishizawa and Satoshi Kawano

Jan. 8 (Bloomberg) -- Japanese stocks rose on speculation overseas earnings will climb, as the yen weakened to its lowest level against the dollar since August following comments by Finance Minister Naoto Kan.

Toyota Motor Corp., the world’s biggest carmaker and which gets 31 percent of revenue in North America, gained 2.9 percent after Kan said yesterday on his first day in office that he would like the yen to weaken “a bit more.” Sony Corp., Japan’s biggest exporter of televisions, advanced 2.4 percent. Aeon Co., the country’s largest supermarket operator, jumped 6.5 percent after its net loss narrowed.

“A weaker yen has a huge positive impact on the market for an export-dependent country like Japan,” said Masatsugu Okeya, a fund manager at Chiba-Gin Asset Management Co. “Foreign investors are buying Japan’s major companies.”

The Nikkei 225 Stock Average added 1.1 percent to 10,798.32 in Tokyo, the highest close since October 2008. The broader Topix index rose 1 percent to 941.29, with more than twice as many stocks advancing as declining.

This marks the only time since 1994 that the broad gauge has increased on the first five business days of the year. It rose 3.7 percent this week, the most since the week of Nov. 30. The Nikkei added 2.4 percent, the most in two weeks.

The Topix had the lowest return last year among benchmark indexes in the world’s 40 largest markets, climbing 5.6 percent, on concern the government will be unable to revive economic growth and a stronger yen will hurt profits. Stocks in the index trade at an average of 37 times estimated earnings, compared with 15 times for the Standard & Poor’s 500 Index in the U.S. and 13 times for the Dow Jones Stoxx 600 Index in Europe.

Yen Weakens

The yen weakened to as much as 93.77 against the dollar today, compared with 92.20 at yesterday’s close of stock trading in Tokyo. A weaker yen boosts the value of overseas sales at Japanese companies when converted into their home currency.

The currency climbed to a 14-year high in November and averaged 93.59 in 2009, the highest annual level since currencies began trading freely in 1971.

Toyota added 2.9 percent to 3,960 yen and was the largest contributor to the Topix’s advance. Isuzu Motors Ltd. and Mazda Motor Corp., Japan’s second-largest car exporter, had the steepest gains on the Nikkei 225, soaring 9.1 percent and 7.4 percent. Sony rose 2.4 percent to 2,809 yen.

“People are buying exporters,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $92 billion. “The yen was already falling, so it’s reactive to anything that triggers a further weakening.”

Aeon, Chip-makers Gain

In the U.S., retailers’ December comparable-store sales gained 3 percent, the biggest gain since April 2008, Retail Metrics Inc. said yesterday.

“Positive U.S. retail sales gave a sense of relief on the U.S. economy and markets,” Nagano said. “If U.S. retailers are strong, it will positively impact the Japanese economy and markets.”

Aeon surged 6.5 percent to 848 yen after its nine-month net loss narrowed 66 percent from a year earlier.

Toshiba Corp., the world’s No. 2 maker of flash memory, climbed 3.5 percent to 538 yen, and NEC Electronics Corp., Japan’s fourth-largest chipmaker, climbed 2.7 percent to 767 yen. Toshiba’s semiconductor business may break even this fiscal year from a loss of 280 billion yen ($3 billion) last year, as chipmakers’ earnings recover from rising demand for high- technology products, Nikkei news said.

JAL, Commodities Fall

Commodity producers were among the biggest losers of the 33 industry groups in the Topix after oil and metal prices fell. Inpex Corp., Japan’s No. 1 oil explorer, lost 2.2 percent to 717,000 yen. Sumitomo Metal Mining Co., the country’s second- largest copper smelter and top producer of gold, slipped 1.3 percent to 1,448 yen.

Crude oil for February delivery declined 0.6 percent in New York yesterday, as the dollar climbed against the euro, while copper futures for March delivery slid 1.9 percent. Gold for immediate delivery fell for a second day today, declining as much as 1 percent.

The London Metal Exchange Index, a gauge of six metals including aluminum and copper, fell 2.4 percent yesterday, the first decline in five days.

Japan Airlines Corp., Asia’s biggest carrier by sales, tumbled 12 percent to 67 yen, the sharpest plunge on the Nikkei 225, after Kan declined to rule out a court-led bankruptcy as an option for the carrier.

To contact the reporters for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.