Nikkei falls, set to end 4-day winning run on U.S. fiscal woes

Wed Nov 28, 2012 3:13am GMT

Quotes

   

* Nikkei slips 0.8 pct and Topix down 0.9 pct
    * Nikkei has rallied nearly 8 pct over past two weeks
    * DeNA gains after Morgan Stanley MUFG raises price target

    By Dominic Lau
    TOKYO, Nov 28 (Reuters) - Japan's Nikkei average shed 0.8
percent on Wednesday, on track to end a four-day winning streak
on jitters about an apparent lack of progress in the U.S. fiscal
policy standoff.
    The Nikkei has rallied nearly 8 percent over the past two
weeks, as the yen has weakened sharply on expectations main
opposition leader Shinzo Abe will win a Dec. 16 election and
increase pressure on the central bank to reverse the country's
persistent deflation.
    But shares of exporters, the main beneficiaries of the
weaker yen, have started to succumb to profit-taking.
    "The Abe trade is probably over," a dealer at a foreign bank
said. "The yen was triggering a lot of buying. People shifted
out of domestic into FX-sensitive names. That trade is almost
over as the FX is stalling at around 82 (yen to the dollar)."  
    By the midday break, the Nikkei was down 79.37
points at 9,343.93 after hitting a seven-month closing high on
Tuesday.
    It is up 10.5 percent this year, trailing an 11.2 percent
rise in the U.S. S&P 500 and an 11.6 percent gain in the
pan-European STOXX Europe 600 index.
    Comments by U.S. Senate Majority Leader Harry Reid on
Tuesday over the lack of progress among Democratic and
Republican lawmakers to reach a deal to avoid a year-end 'fiscal
cliff' helped trigger profit-taking on the Nikkei.
 
    Exporters losing ground included Canon Inc, Honda
Motor Co, chip measuring instruments maker Advantest
Corp and TDK Corp, down between 1.3 and 3.2
percent. 
    "The current situation is based on expectations that Japan
may change under the next government," said Hisao Matsuura,
equity strategist at Nomura Securities, noting that the market
is still subject to short-term fluctuations.
    "We can expect a steady rise after (the election)," he said,
adding that Nomura had a year-end Nikkei target of 9,500, 1.7
percent above where the index ended the morning session.
    Abe has urged the Bank of Japan to take more extreme
monetary easing steps, weakening the yen to a 7-1/2-month low of
82.84 against the greenback on Nov. 22. The Japanese currency
was quoted at 81.89 yen to the dollar on Wednesday. 
    
    
    TO CHASE OR NOT TO CHASE?
    The trader said investors were facing a dilemma whether to
chase the market higher or move back into defensive stocks,
which are less impacted by slowing global growth.
    He nominated medical equipment maker Nihon Kohden Corp
, up 1 percent, as one firm with defensive qualities as
well as robust growth potential. 
    Notable gainers included social gaming company DeNA Co Ltd
, a widely held stock, which climbed 1.7 percent after
Morgan Stanley MUFG lifted its price target, citing strong
overseas growth potential.
    The brokerage, however, cut the price target of DeNA rival,
Gree Inc. The stock lost 1.4 percent.  
    The broader Topix fell 0.9 percent to 774.96 in
relatively active trade, with volume at 55 percent of its full
daily average for the past 90 trading days.
    In terms of valuations, Japanese stocks carry a 12-month
forward price-to-earnings of 11.3, cheaper than the S&P 500's
12.1 but slightly more expensive than the STOXX Europe 600's 11,
data from Thomson Reuters Datastream showed.