World Economy

Nikkei’s Biggest Gain Since October 2008

Nikkei’s Biggest Gain Since October 2008Nikkei’s Biggest Gain Since October 2008

Japanese stocks soared, with the Nikkei 225 Stock Average staging the steepest advance since the aftermath of the 2008 Lehman Brothers Holdings Inc. bankruptcy, amid speculation a selloff that drove valuations to an 11-month low was overdone.

The Nikkei 225 jumped 7.75 to 18,770.51 at the close in Tokyo, its biggest gain since October 2008, to reverse losses on Tuesday that wiped out the gauge’s 2015 advance. The broader Topix index surged 6.4% to 1,507.37, the most since March 2011, amid volume 9% above the 30-day average. Japanese shares suffered the world’s second-steepest drop through Tuesday since China’s shock yuan devaluation last month, with Shanghai’s equity gauge the only one that fared worse, Bloomberg reported.

“The selloff in Japanese equities has been excessive amid concerns over China’s economic slowdown,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management, which oversees about $41 billion “Today’s rally can be sustained once the market’s perception of the Chinese economy improves.”

All of the Topix’s 33 industry groups rose, with drug makers and insurers leading the advance. Just 14 of the 1,887 companies on the gauge declined, the fewest since January 1999. The yen traded at 120.44 per dollar, weakening for a third day. US stocks on Tuesday posted the second-biggest increase this year.

The Topix lost 16% from an August peak through Tuesday as concern about China’s economic outlook roiled markets. The yen touched a seven-month high versus the dollar on Aug. 24, the same week that foreigners fled Japanese equities at the fastest pace in at least a decade. Short-selling has accounted for more than 40% of trading on the Tokyo Stock Exchange since Sept. 1, the highest proportion since the bourse began keeping daily records in 2008.