Tokyo - Japanese shares surged, with the Topix index climbing the most in more than a year, after a rebound in global equities and a report the nation’s pension fund will boost domestic stock holdings.
The Topix jumped 4 percent to 1,224.34 at the close of trading in Tokyo, the most since June 2013.
Some 1,802 stocks on the first section of the Tokyo Stock Exchange rose, the most on record, according to the bourse.
The measure lost 12 percent the past three weeks, meeting the common definition of a correction.
The Nikkei 225 Stock Average added 4 percent to 15,111.23 today.
The yen lost 0.4 percent to 107.27 per dollar after dropping 0.5 percent on October 17.
Japan’s $1.2 trillion (R13 trillion) Government Pension Investment Fund will increase its allocation target for local shares to about 25 percent from 12 percent, the Nikkei newspaper reported without attribution.
GPIF will also boost its holdings of foreign bonds and stocks to about a combined 30 percent from 23 percent, while reducing domestic debt to the 40 percent level from 60 percent, the Nikkei said October 18.
“Twenty-five percent is more than the market expected,” said Kenji Shiomura, a Tokyo-based senior strategist at Daiwa Securities Group, Japan’s second-largest brokerage.
“They probably can’t buy all the Japanese stocks they need to get to 25 percent by the time they announce it. However, it wouldn’t be a surprise if they’ve already started moving bit-by-bit.”
Toyota Surges
Toyota Motor, the world’s biggest carmaker by market value, added 5.2 percent as the yen fell.
Resona Holdings gained 6.2 percent after a report the country’s second-biggest lender by market value progressed to the second round of bidding for Citigroup’s consumer-banking business in Japan.
NEC added 6.5 percent after a report the computer maker’s operating profit will rise.
Investors are awaiting word from GPIF on its new allocations after a government-picked panel advised it to reduce bonds to boost returns.
Takatoshi Ito, a member of the panel, said his personal recommendation is to increase the target for Japanese and foreign stocks to about 25 percent each and cut notes to around 35 percent.
“The GPIF news will of course will be supportive for equity markets,” said Stuart Beavis, head of institutional equity derivatives at Vantage Capital Markets in Hong Kong.
“I have an impression the range was 20-30 percent, which was super wide, but 25 percent is a very positive number.”
US Shares
Futures on the Standard & Poor’s 500 Index gained 0.4 percent today.
The underlying measure rebounded 1.3 percent on October 17 as earnings beat estimates, consumer confidence reached a seven-year high and investors speculated that central banks will add more economic stimulus.
Toyota gained 5.2 percent to 6,028 yen.
Honda Motor, which gets about 80 percent of its revenue abroad, added 3.5 percent to 3,367.5 yen.
Sony, an electronics maker that gets about 70 percent of sales from outside Japan, added 3.9 percent to 1,875 yen.
Resona Holdings jumped 6.2 percent to 589.9 yen.
Sumitomo Mitsui Financial jumped 3.3 percent to 3,963 yen, the most since May.
Shinsei Bank climbed 2.8 percent to 217 yen.
Resona Holding’s banking unit, as well as Sumitomo Mitsui Banking, Sumitomo Mitsui Trust Bank and Shinsei, have progressed to the second round of bidding for Citigroup’s consumer-banking business, Sankei newspaper reported.
NEC added 6.5 percent to 345 yen, the most since February.
Operating profit for the six months ended September probably rose to about 20 billion yen from 379 million yen a year ago, the Nikkei newspaper reported, without citing anyone.
The Topix’s slide in the past three weeks wiped out gains for this year after a world-beating 51 percent surge in 2013.
The Topix traded at 13.7 times estimated earnings today, compared with 15.7 on the S&P 500 on October 17, the data show. - Bloomberg News