Nikkei rises, heads for longest weekly run since 1959

Fri Feb 1, 2013 3:02am GMT

* Nikkei set to post 12th straight week of gains
    * Sharp up on strong profit optimism
    * Softbank rises on rosy earnings
    * Investors eye mid-to-long term theme in Japanese
stocks-analyst

    By Ayai Tomisawa
    TOKYO, Feb 1 (Reuters) - Japan's Nikkei average rose on
Friday morning and is set to post its 12th straight week of
gains, as investors bought companies that sparkled during the
earnings season, while expectations of a recovery in the U.S.
economy supported sentiment.
     The Nikkei rose 0.4 percent to 11,177.33 by the
midday break after hitting a new 33-month high of 11,220.42. The
index has gained 2.3 percent this week, putting it on track for
a 12th straight week of gains, the longest run of weekly gains
since 1959.
     With earnings in full swing, Sharp Corp gained 2.9
percent to 320 yen after sources familiar with the matter told
Reuters the company is set to post its first operating profit in
five quarters in the three months through December on strong
sales of home appliances and mobile phones. 
    Japan's third-largest mobile carrier, Softbank Corp
, jumped 5.2 percent to 3,430 yen after posting a 23.7
percent rise in operating profit in the third quarter, thanks to
strong subscriptions from iPhone users. It also said it was on
track to hit its annual operating profit target of 700 billion
yen ($7.76 billion) this financial year. 
    "While many exporters disappoint the market with
worse-than-expected results, those reporting good figures
shine," said Shun Maruyama, chief Japan equity strategist at BNP
Paribas.
    He also said that investors, who had added exporters to
their portfolios on the back of a weakening yen, have started to
shift to sectors sensitive to the domestic economy.
    The Nikkei has gained about 30 percent since mid-November,
when Shinzo Abe, then a candidate for leader of the opposition
and now prime minister, began calling for aggressive monetary
easing in his election campaign.
    Financials and real estate, which could benefit from Abe's
reflationary policies, have caught up with rises in exporters.
    While the auto sector has gained 46 percent since
mid-November, banking has added 40 percent and real
estate has advanced 33 percent in the same period.
    "They are looking for a mid-to-long term theme in Japanese
shares as the yen's sharp weakness will not last forever. That's
a sign that they see upside in the Japanese market in the longer
term, and people are counting on stocks which are expected to
fare well if the country is out of deflation," Maruyama said.
    So far, Japanese companies have reported lacklustre earnings
for the Oct-Dec period: Of the 54 Nikkei companies that have
announced quarterly results so far, nearly two-thirds have
missed market expectations, according to Thomson Reuters
StarMine. That compared with 56 percent in the previous three
months.
    Companies reporting their results on Friday include
Panasonic Corp, Sharp and Mitsubishi UFJ Financial
Group.
    But market observers said that investor focus is on
forecasts for the full year through March as well as the year
ending March 2014 - if companies have a strong outlook for the
foreseeable future, the market will likely dismiss poor results.
    "Unless companies reporting poor quarterly results
disappoint investors with even more gloomy estimates, bad news
should be seen as a past event," said Hiroichi Nishi, an
assistant general manager at SMBC Nikko Securities. "Investors'
risk appetite is being supported by underlining hope for
'Abenomics' and expectations for the recovering global economy.
     The United States nonfarm payrolls report is forecast to
show a rise of 160,000 jobs and the unemployment rate to remain
steady at 7.8 percent. 
    The broader Topix added 0.4 percent to 943.74, with
1.95 billion shares changing hands by the midday break, on track
to chalk up heavy volume by the end of the day. Last week's
average daily volume was 3.44 billion shares.