Nikkei hits 9-month high as Abe takes over as prime minister

Wed Dec 26, 2012 7:10am GMT

* Nikkei gains 1.5 pct, Topix rises 1.2 pct
    * Nikkei may keep refreshing highs through year-end -analyst
    * Weaker yen pushes up exporters
    * Real estate, banks also gain on new government hopes

    By Ayai Tomisawa
    TOKYO, Dec 26 (Reuters) - The Nikkei climbed to its highest
point in nine months on Wednesday as the yen fell to a 20-month
low on expectations that Japan's new prime minister would push
for more aggressive monetary and fiscal policies, boosting
shares of exporters like Sony Corp.
    Shares of real estate and financial companies also benefited
from hopes for the new government under Shinzo Abe, who was
confirmed as prime minister by the lower house of parliament
just before the market close. 
    The benchmark Nikkei average closed up 1.5 percent
or 150.24 points at 10,230.36, its high for the day. That marked
its loftiest level since March 27, when it ended at 10,255.15.
    The broader Topix added 1.2 percent to 847.71.
    "The Nikkei will probably keep refreshing its highs until
the end of the year, and will likely maintain its strength
through February or so on hopes for the new government to draw
out a strong economic policy," said Kenji Shiomura, an equities
analyst at Daiwa Securities.
    Abe's Liberal Democratic Party surged back to power in an
election on Dec. 16, three years after a crushing defeat that
ended more than 50 years of almost nonstop rule by the
conservative, business-friendly party.
    He has promised to push for aggressive monetary easing by
the Bank of Japan and big government spending to rescue the
economy from its fourth recession since 2000.
    The yen on Wednesday traded at 85.38 to the dollar, its
weakest since April 2011 on expectations that Abe would pressure
the central bank to ease its monetary policy more aggressively. 
  
    That pushed up shares of exporters, as a weaker yen boosts
their overseas earnings when repatriated. Toyota Motor Corp
 gained 1.3 percent, Nissan Motor Co added 2.1
percent and Sony rose 4 percent.
    Property developer Mitsui Fudosan Co rose 1.7
percent. Banking group Mizuho Financial Group advanced
2.0 percent, while brokerages Nomura Holdings Inc 
climbed 2.8 percent and Daiwa Securities Co gained 2.6
percent.
    Buying of Japanese stocks continued despite signs that they
were overbought, although trading volume was thin due to the
Christmas holiday. Some 2.79 billion shares changed hands on the
main board, below last week's daily average volume of 3.53
billion shares.
    After rising about 18 percent over the last six weeks, the
Nikkei is in "overbought" territory, with its 14-day relative
strength index at 75.94. Above 70 is deemed overbought and could
signal that a correction is imminent.
    "Most foreign funds have added Japanese shares and there are
fewer participants today, but there still is a reason for the
Nikkei to rise," said Hideyuki Okoshi, general manager at
Chibagin Securities.