Japan's Topix, Nikkei 225 Advance to 2007 Highs

(Bloomberg) — Japanese stocks rose, with the Topix index and the Nikkei 225 Stock Average closing at the highest levels since 2007, as the market reopened from a holiday during which the yen weakened and after data showed machine orders surged.

The Topix advanced 1.5 percent to 1,449.39 in Tokyo, its highest close since December 2007. All but four of its 33 industry groups rose, with volume on the measure 23 percent above its 30-day average. The Nikkei added 1.9 percent to 17,979.72, closing at its strongest since July 2007. The yen traded at 120.22 per dollar after weakening 1.5 percent in the past two days.

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“You ain’t seen nothing yet,” said Nicholas Smith, a strategist at CLSA Ltd. in Tokyo. “Japan’s the area of the world that actually has the strongest earnings growth. That’s before you start to factor in the benefits of all these share buybacks going on at the moment.”

Toyota Motor Corp., the world’s biggest carmaker by market value, added 1.8 percent. Fanuc Corp. jumped to a record after activist investor Daniel Loeb’s Third Point hedge fund said it invested in the robot maker. Sony Corp. soared 5.1 percent after MSCI Inc. raised the stock’s weighting in a regional equity index. SoftBank Corp. lost 0.5 percent after reporting a drop in net income.

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Earnings, Buybacks

Earnings per share for companies on the Topix are expected to grow 15 percent over the next 12 months, according to data compiled by Bloomberg. Of the companies that have reported earnings this quarter and for which estimates are available, 67 percent beat expectations, Bloomberg data show.

Marui Group Co. surged 16 percent to 1,337 yen to lead gains on the Nikkei 225. The department-store operator will spend as much as 15 billion yen ($ 125 million) to buy back shares, and will cancel about 13 percent of stock on March 20.

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Fanuc jumped 6.2 percent to 22,045 yen after Third Point said it had acquired a stake and urged the world’s largest maker of automation equipment to buy back stock.

A government report today showed Japanese machine orders surged 11.4 percent in December from a year earlier, double the pace estimated by economists.

“The machinery orders numbers were extremely good,” said Andrew Clarke, director of trading at Mirabaud Securities Asia Ltd. in Hong Kong. “It reflects a weaker yen and I would say it underlines the fact that Abenomics is working, despite its critics.”

Exporters rose, with Toyota gaining 1.8 percent to 7,851 yen. Nissan Motor Co., which gets about 80 percent of its sales abroad, advanced 2 percent to 1,127 yen. Nikon Corp. added 1.7 percent to 1,463 yen.

Sony, SoftBank

Sony rose 5.1 percent to 3,231.5 yen after the company’s weighting was raised on the MSCI Asia Pacific Index. Today’s advance brought the stock’s gains this year to 31 percent, making it the third-best performing stock on the Nikkei 225.

SoftBank lost by 0.5 percent to 7,094 yen. Third-quarter net income plunged 80 percent to 18.7 billion yen, compared with estimates for a 75.8 billion yen gain, as Japanese subscriber growth stalled and losses widened at Sprint Corp.

Finance ministers from the 19-nation euro meeting in Brussels failed to reach an agreement on how to keep bailout funds flowing to Greece and will resume talks on Feb. 16.

“We covered a lot of ground but didn’t actually reach a joint conclusion on how to take the next steps,” Eurogroup Chairman Jeroen Dijsselbloem told reporters. “There has to be a political agreement on the way forward.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent after the underlying gauge closed little changed on Wednesday in New York.

“If the yen continues at these levels, it’ll be positive for Japanese stocks,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone. If talks on Greece “break down there are risks that it’ll cause the currency markets and risk assets to move.”

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey, Jim Powell

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