Tokyo stocks log best week since 2009

Tokyo stocks surged 9.2pc this week, leading Asian gains, as Nintendo went through the roof.

Nintendo's nascent shift into mobile gaming has proved a massive hit. Picture: AFP.

Japanese stocks on Friday notched their best week in six-and-a-half years, leading gains across Asia amid relief over a weakening yen and signs of economic recovery in China.

Japan’s Nikkei Stock Average ended up 0.7 per cent, gaining 9.2 per cent over the week. It was the best weekly advance since early December 2009, when it rose 10.4 per cent in a week.

Gains came as the Japanese yen weakened sharply. Japanese shares typically rise when the currency depreciates, on the view that a weaker yen makes Japanese exports more competitive abroad. The yen was recently trading at 105.73 to the US dollar.

Investors’ hopes for an expansive fiscal-stimulus package and central bank easing -- including persistent chatter about the possibility of a radical money-printing plan known as “helicopter money” -- have propelled Japanese stocks through the week.

Some investors said Japan’s stock rally his week represented a turning point, with room for the rally to continue in the second half of the year. In recent weeks, the benchmark has traded places with China’s Shanghai Composite Index as Asia’s worst performing stock index this year. But this week’s rebound boosted the Nikkei, which is now down 13.3 per cent versus Shanghai’s 13.7 per cent loss year to date.

“Overall, it’s a very good week for Japan, which sets up a very good base in the second half for the market to catch up,” said Arthur Kwong, head of Asia Pacific equities at BNP Paribas Investment Partners. “I do believe it’s a turnaround. In fact, things were not doing that bad anyway. It’s just the macro-risk that led the currency to appreciate and hurt sentiment.”

Shares of Japanese messaging-app operator Line rocketed 32 per cent Friday in the company’s trading debut in Tokyo. Despite the jump, shares settled 11 per cent lower than the opening price of 4,900 yen, raising concerns that those who bought at the opening now show a loss. Line’s New York-traded shares surged 27 per cent on Thursday.

Meanwhile, Nintendo shares added another 9.8 per cent, bringing its total weekly gain to 63 per cent. Fast Retailing, owner of the Uniqlo clothing brand, rose 14.8 per cent after the company reported better-than-expected quarterly earnings. Even though operating profits fell in the second quarter, the market had factored in a much worse scenario, said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management.

“The focus is in equities, especially as bond yields keep going quite low, there aren’t many alternatives for investors,” said Alex Wijaya, a senior sales trader at CMC Markets in Singapore. “Any good news is time to put on the risk.”

Elsewhere in the Asian-Pacific region, Korea’s Kospi gained 0.4 per cent and Hong Kong’s Hang Seng Index rose 0.5 per cent. China’s Shanghai Composite ended essentially flat.

China’s economy grew at 6.7 per cent in the second quarter from last year, holding steady from the previous quarter, according to data from the National Bureau of Statistics. Analysts had forecast 6.6 per cent growth for the period.

Other China data showed June industrial output accelerated in May. Housing sales, property investment and construction starts also expanded in the first half of the year from a year ago.

But the data failed to enthuse Chinese retail investors, who account for around 80 per cent of all trading in Chinese shares. The market ended flat, further underscoring the tendency of Chinese stocks to be detached from economic fundamentals.

In Southeast Asia, Singapore’s FTSE Strait Times index was recently up 0.6 per cent, as trading resumed following an outage Thursday. Singapore Exchange, the market operator, said Friday morning that a technology issue disrupted Thursday’s trade confirmation process. The exchange’s chief executive, Loh Boon Chye, apologised in a statement for the disruption to trading, and added that SGX must improve its recovery time and minimise downtime for market participants.

- Dow Jones newswires