Nikkei rises to 7-month high as foreigners buy exporters

Mon Nov 26, 2012 7:12am GMT

* Investors take profits from early gains as market
overheated - trader
    * Renesas jumps 17 pct on bailout report
    * Investors continue pouring new money into Japan - trader

    By Ayai Tomisawa
    TOKYO, Nov 26 (Reuters) - Japan's Nikkei share average edged
up to a 7-month closing high on Monday, led by exporters on
expectations that a weaker yen will boost earnings.
    Exporters moved higher but trimmed early gains on
profit-taking as investors worried about the pace of recent
gains in the Japanese market. Toyota Motor Corp, Honda
Motor Co and Canon Inc have risen 13-16
percent so far this month. The three managed to hold gains of
0.2-1.7 percent on Monday and were among the five most-traded
stocks by turnover.
    The Nikkei rose 0.2 percent to 9,388.94, its highest
closing level since April 27. It rose as high as 9,487.94 in
early trade.
    The yen has come under pressure on expectations the Bank of
Japan will be pushed towards more drastic easing, after the
country's opposition party, tipped to win next month's election,
urged radical monetary stimulus to beat deflation.
 
    The opposition Liberal Democratic Party (LDP) is holding its
lead ahead of a December 16 election, opinion polls showed on
Monday. 
    The dollar was trading at 82.26 yen on Monday, near
an eight-month high around 82.84 set last week.
   Traders said that investors, who were underweight of Japanese
stocks, continued to pour new money in to the Japanese market on
the back or the weakening yen. On Monday, foreign securities
posted net buy orders for Japanese stocks for an eleventh day.
    "It's true that foreigners are returning to the Japanese
market and they are buyers of Japanese shares," said Makoto
Kikuchi, the chief executive officer of Myojo Asset Management.
    But he added that while the Nikkei has gained 8.4 percent in
two weeks, there are signs that the Japanese market is
overbought and profit-taking is no surprise.
    "The 9,500-mark is a big psychological resistance line, and
we still don't know if foreign investors are making long-term
investments as it's still fresh in their minds that many
exporters' latest results were bad."
     Japanese company earnings have been weak this quarterly
reporting season, with 56 percent of Nikkei companies
undershooting market expectations, according to Thomson Reuters
StarMine data. That compared with 54 percent in the previous
quarter. 
    
    BOTH VOLUME AND VALUE CATCH UP
    While investors remain cautious about the rising pace in the
Japanese market, sentiment remains positive, which is reflected
in the Tokyo market's trading volume and value.
    Last week's average daily trading volume was high, with 1.94
billion shares changing hands in the Tokyo Stock Exchange's
first section, up 9 percent from the previous week. Daily
trading value was also positive, with 1.15 trillion yen of
shares traded, up about 13 percent on the previous week.
    On Monday, 2.1 billion shares changed hands on the board
while trading value was 1.3 trillion yen.
    "This is a good sign that energy still lasts even though
daily gains are limited," said Hiroichi Nishi, general manager
at SMBC Nikko Securities.
    Among other shares, the upbeat sentiment pushed brokerage
shares Nomura Holdings Inc up 1.5 percent to a
seven-month high and rival Daiwa Securities Group Inc 
1.9 percent higher.
    Shares of embattled Renesas Electronics Corp jumped
17 percent after the Nikkei reported that its shareholders have
approved a government-led bailout. 
    Sony Corp and Panasonic Corp 
underperformed, falling 1.9 percent and 0.3 percent,
respectively after credit rating agency Fitch downgraded their
debt ratings to "junk" status on Friday. 
    The Nikkei has added 11 percent so far this year, putting
its performance on a par with the U.S. S&P 500's 12.05
percent rise and the pan-European STOXX Europe 600's 
11.77 percent gain.
    The broader Topix added 0.4 percent to 779.50.
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.