Japan's Nikkei Climbs to a 7-Month High, Exporters Lead Gains
By Patrick Rial
Dec. 14 (Bloomberg) -- Japan's Nikkei 225 Stock Average rose to the highest in seven months after U.S. retail sales increased more than expected in November and the yen weakened against the dollar, boosting the value of overseas sales. Sony Corp. paced advances by exporters.
``Robust consumer demand in the U.S. and a weaker yen are certainly helping exporter stocks,'' said Yoji Takeda, who helps manage $900 million at RBC Investment (Asia) Ltd. in Hong Kong. A rate increase this month would ``dampen the market's sentiment.''
Indexes also advanced after the Nihon Keizai newspaper said the Bank of Japan will probably leave interest rates unchanged at its next meeting, keeping borrowing costs low for companies and individuals. Lenders such as Mitsubishi UFJ Financial Group Inc. climbed on confidence loan margins will continue to improve even without the rate increase.
The Nikkei 225 added 136.27, or 0.8 percent, to 16,829.20 in Tokyo, the highest close since May 11.
The broader Topix index climbed 12.66, or 0.8 percent, to 1651.85, reaching the highest since Oct. 26. Technology and transport-related stocks accounted for 27 percent of the advance.
Sony, the maker of Vaio computers and the PlayStation 3 game console, rose 90 yen, or 1.8 percent, to 4,970. Toyota Motor Corp., the world's largest automaker by value, added 70 yen, or 1 percent, to 7,370. Canon Inc., which generated almost 75 percent of its sales from overseas last year, jumped 110 yen, or 1.7 percent, to 6,650.
Moderate Growth Continuing
U.S. November retail sales rose for the first time since July, climbing 1 percent after a revised 0.1 percent decline in October, the Commerce Department said yesterday. Economists expected a 0.2 percent rise, according to the median forecast in a Bloomberg News survey. Electronics sales increased 4.6 percent.
Consumers, buoyed by an expanding labor market and rising wages, are keeping the U.S. economy growing at the moderate pace predicted by the Federal Reserve. Consumption accounts for about 70 percent of gross domestic product, dwarfing real estate and manufacturing.
The yen recently traded at 117.52 against the dollar, weaker than the close of market trading yesterday when the dollar bought 116.92 yen. The yen depreciated to as low as 117.65, the weakest since Nov. 22. Japan's currency fell to a record low of 155.47 against the euro yesterday.
A weaker yen increases the value of Japanese exporters' dollar-denominated sales when converted back into local currency, while their products become more competitive abroad.
Banks Rise
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by assets, jumped 30,000 yen, or 2 percent, to 1.5 million. Mizuho Financial Group Inc., the nation's No. 2, rose 15,000 yen, or 1.8 percent, to 853,000.
Interest rates on new loans climbed to the highest in almost three years in October, according to the latest available data.
The central bank will probably refrain from raising interest rates at its final policy board meeting for the year to be held Dec. 18-19, the Nihon Keizai said. Most of the nine voting policy board members want to examine more personal consumption and price data as well as U.S. economic growth before raising borrowing costs, the newspaper said.
The Bank of Japan raised the benchmark interest rate for the first time in almost six years in July.
``We're now seeing a positive impact of the Bank of Japan's rate increase on loan rates,'' said RBC's Takeda.
Japan Tobacco Falls
Japan Tobacco Inc., the world's third-biggest maker of cigarettes, dropped 14,000 yen, or 2.4 percent, to 579,000. The stock rose to a record yesterday, sending its relative strength index, a moving average based on whether the shares rose or fell, to 79.62. A reading over 70 indicates to some technical analysts that the stock is poised to drop.
Japan Tobacco surged 17 percent since Dec. 7 to yesterday, following a Financial Times report that the company may buy U.K.-based tobacco company Gallaher Group Plc.
Yakult Honsha Co., which makes fermented milk and soft drinks, surged 210 yen, or 6.4 percent, to 3,490. Nobuyoshi Miura, an analyst at Nikko Citigroup Ltd. in Tokyo, wrote in a report dated yesterday that the company said it plans to expand into 48 countries by 2010 from 26 currently, increasing the availability of its products to 4.8 billion people from 800 million.
16-Year High
Yakult estimated overseas operating profit, or sales minus the cost of goods sold and administrative expenses, will rise 60 percent to 22 billion yen ($187 million) for the year ending on March 31, 2011, according to Miura.
Shimadzu Corp., a Japanese maker of measuring instruments and medical systems, jumped 31 yen, or 3 percent, to 1,050, the highest close in 16 years. The company said it will start selling a kit to test for noroviruses, the most common cause of food-borne illnesses.
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