Japanese Stocks Rebound; Asahi Glass, Mitsubishi Lead Advance

Japanese stocks rose, with the Topix index rebounding from its worst decline in more than two years, as profit forecasts from Asahi Glass Co. and Mitsubishi Corp. boosted optimism earnings growth will be sustained as the economy expands.

The Topix added 3.35, or 0.3 percent, to 1088.89 at the 3 p.m. close in Tokyo, after having the biggest drop since the day after the Sept. 11 terrorist attacks yesterday on concern the U.S. will raise interest rates as soon as June. The Nikkei 225 Stock Average gained 22.48, or 0.2 percent, to 10,907.18, snapping its six-day, 11 percent slide.

NTT Data Corp. slumped after saying profit will fall 41 percent this fiscal year because it plans to spend money developing its computer base. Softbank Corp., Japan's second- largest supplier of high-speed Internet access services, dropped after its annual net loss widened by 7.1 percent.

``The main focus among investors right now is earnings,'' said Nobuyoshi Tsumori, who helps manage the equivalent of $880 billion in global assets at Barclays Global Investors Ltd. in Tokyo. ``The stock market and the economy are still looking stable because, after all, a rise in the interest rate is evidence of economic growth in the U.S.''

Tsumori said he favors technology stocks, which he didn't name, because of growing demand for digital-related products and an improvement in industrywide capital spending.

A government report today showed Japan's index of leading economic indicators was above 50 percent in March for the 12th month, signaling the economy, the world's second largest, will probably grow for at least another six months.

Global Slump

The Nikkei has fallen 10 percent since its 2004 peak April 26 as U.S. economic reports including job data heightened speculation the Federal Reserve will raise interest rates. Concern China, Japan's second-biggest export market, may slow an expansion that accelerated to 9.7 percent in the first quarter has also contributed.

The declines haven't been confined to Japan. Yesterday, the Dow Jones Industrial Average slipped below 10,000 for the first time this year and Europe's Dow Jones Stoxx 50 fell 2.4 percent.

``The recent slump created a good opportunity for investors to buy stocks with solid earnings outlooks,'' said Yoshihisa Okamoto, who helps manage $1.9 billion at Fuji Investment Management Co. in Tokyo. Stocks including Kaga Electronics Co., an electronic parts maker, are good investments, he said.

Asahi Glass Jumps

The Topix Glass & Ceramics Products Index jumped 3.4 percent, making it the best performer among the 33 subgroups that make up the Topix index.

Asahi Glass jumped 82 yen, or 7.6 percent, to 1,157, for its biggest advance since March 4, 2002. Late yesterday, the company said it expects to make 28 billion yen ($247 million) this year, 27 percent more than its earlier estimate.

Goldman, Sachs & Co. in a note to clients dated yesterday said it added the stock to a list of equities it considers attractive, saying it expects the shares to rise as high as to 1,400 yen over the next 12 months.

Mitsubishi, advanced 47 yen, or 5 percent, to 996 after saying full-year profit jumped 85 percent, helped by sales from energy trading and mining operations. The company expects profit to increase 13 percent this fiscal year.

Marubeni Corp., the nation's fifth-biggest trading company by revenue, climbed 10 yen, or 4.2 percent, to 246. After the market closed yesterday, Marubeni said it expects net income to rise 6.9 percent in the year to March 2005. Its annual profit rose 14 percent to a record 34.6 billion yen in the 12 months ended March 31.

Earnings Rise

Kirin Beverage Corp., a non-alcoholic drinks maker, rallied 170 yen, or 7.6 percent, to 2,405 after saying quarterly profit almost tripled and sales rose yesterday. Separately, HSBC Securities Japan Ltd., raised it recommendation on the stock to ``add'' from ``reduce.''

Among others reporting earnings today, Bridgestone Corp., the world's biggest tiremaker, advanced 71 yen, or 4 percent, to 1,842. After the market closed, it said first-quarter profit totaled 28 billion yen and raised its forecast for earnings by two-thirds for the six months ending June 30.

Some 1.7 trillion yen in shares included in the Topix traded, 15 percent more than the daily average for the past three months. Stocks that rose outnumbered those that fell 780 to 712 on the first section.

`More Selling'

NTT Data, Japan's largest computer systems and services supplier, slid 35,000 yen, or 9.2 percent, to 344,000, making it the biggest drag on the Nikkei. It said yesterday full-year profit may decline to 16 billion yen in the year ending March 2005. Sales may fall 2 percent to 830 billion yen.

Nomura Holdings Inc. downgraded the stock to ``reduce'' from ``neutral'' after the result.

Softbank slumped 370 yen, or 8.7 percent, to 3,880, rounding off a six-day, 24 percent slide. The company yesterday reported a group net loss of 107 billion yen for the year ended March 31, widening from the previous year's 100 billion yen loss.

Alps Electric Co., the world's second-biggest maker of magnetic heads for disk drives, slumped 98 yen, or 6.7 percent, to 1,375 after reporting a 16.9 billion yen profit, 3.3 percent less than it forecast.

``At a time like this when investors are looking for further direction in the overall market, disappointing results are going to prompt more selling than when market sentiment is bullish,'' said Fuji Investment's Okamoto.

Worst Performers

NEC Electronics Corp., the world's largest maker of semiconductors for cell-phone screens, slumped 570 yen, or 8.6 percent, to 6,090. It sold 100 billion yen of convertible bonds, raising concern the value of their existing shares may be diluted. The funds will be used for investment and to repay bank loans, the company said.

The Topix Real Estate Index dropped 2 percent, making it the worst performing group among the Topix groups. Mitsubishi Estate Co., Japan's largest property developer, lost 20 yen, or 1.9 percent, to 1,200. Mitsui Fudosan Co., Japan's second-biggest property developer, slipped 38 yen, or 3.4 percent, to 1,074.

Credit Suisse First Boston recommended investors lower their holdings in Japanese construction and real estate stocks because gains have only been supported by optimism that prices are no longer falling. There must be further evidence of earnings growth for shares to go higher, the broker said.

Investors should trim their holdings in real estate and construction companies to 20 percent below their representation in benchmarks from the earlier recommended 5 percent, Shinichi Ichikawa, strategist at CSFB, said in a note to clients dated yesterday.

Nikkei 225 futures for June delivery gained 0.7 percent to 10,890 in Osaka and climbed 1 percent to 10,905 in Singapore.

Alps Electric Co. (6770 JT)
Asahi Glass Co. (5201 JT)
Bridgestone Corp. (5108 JT)
Kaga Electronics Co. (8154 JT)
Kirin Beverage Corp. (2595 JT)
Marubeni Corp. (8002 JT)
Mitsubishi Corp. (8058 JT)
Mitsubishi Estate Co. (8802 JT)
Mitsui Fudosan Co. (8801 JT)
NEC Electronics Corp. (6723 JT)
NTT Data Corp. (9613 JT)
Softbank Corp. (9984 JT)

600450 Japanese Stocks Rebound; Asahi Glass, Mitsubishi Lead Advance glassonweb.com
Date: 12 May 2004
Source: Bloomberg.com

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