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4 years ago
Nikkei down in choppy trade as Fed policy signals awaited; Sony gains
June 18, 2013 / 7:27 AM / 4 years ago

Nikkei down in choppy trade as Fed policy signals awaited; Sony gains

* Nikkei falls 0.2 pct, Topix up 0.2 pct
    * Volume lowest since Dec as market focused on Fed outcome
    * Sony rises after hedge fund ups stake, presses spin-off

    By Ayai Tomisawa
    TOKYO, June 18 (Reuters) - Japan's Nikkei average edged down
in choppy trade but managed to end above 13,000 on Tuesday, with
most players staying on the sidelines as they awaited the
outcome of the U.S. Federal Reserve's meeting for clues on when
it may begin tapering back stimulus.
    The Nikkei slipped 0.2 percent to 13,007.28 points
after trading as high as 13,139.48 earlier.
    Exporters were mixed, with Toshiba Corp rising 1.1
percent, while Panasonic Corp dropped 0.5 percent and
Toyota Motor Corp rose 1.8 percent.
    Sony Corp climbed 4.4 percent after New York-based
hedge fund company Third Point said it had raised its stake in
the Japanese firm and asked for an opportunity to present its
proposal for a partial spin-off of Sony's entertainment unit to
the board. 
    The Japanese market has seen extreme volatility accompanied
by steep declines over the past few weeks as investors cut their
long Japanese equities and short yen positions on worries of
reduced stimulus from the Fed.
    Disappointment over an underwhelming package of structural
reforms unveiled recently and worries over slowing growth in
China also contributed to the market tumult.
    The index slumped into bear market territory to reach a low
of 12,415.85 last Thursday, a level last seen before the Bank of
Japan announced sweeping monetary easing steps on April 4,
falling more than 20 percent from a 5 1/2-year high hit on May
23.       
    Markets are looking to the Fed to clarify the outlook on 
its massive stimulus programme when the U.S. central bank
concludes its two-day policy-setting meeting on Wednesday.
    "The market is assuming that he (Fed Chairman Ben Bernanke)
won't be announcing anything drastic that would shock the
market" given how sensitive they have become to comments on
policy, said Fujio Ando, a strategist at Chibagin Securities.
"Investors are not overly worried, but they are still careful
about taking positions because of recent volatility in the
market." 
    Underscoring the volatility, since May 23 the Nikkei has had
15 sessions where intraday swings exceeded 2.5 percent, compared
with 16 such trading days for the year up to May 22 and four
such days in the whole of 2012. The U.S. S&P 500 only has
had one such trading day in 2013, and the Euro STOXX 50
 index has 11.
    Some analysts expect the Fed policy outlook may become
clearer in coming months. 
    "Tapering the stimulus by small increments is possible...
But the Fed won't likely do so unless the U.S. economy shows a
steady recovery, and a test period will be June-August," said
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ
Morgan Stanley. 
    The broader Topix gained 0.2 percent to 1,086.40.
    Volume was light, with only 2.43 billion shares changing
hands, the lowest since last December.
    BNP Paribas remained bullish on Japanese equities in the
medium term.
    "We have witnessed an improvement in fundamentals (as
confirmed during the Q1 earnings) and thus believe the recent
correction provides a good entry opportunity for the medium
term," it wrote in a note to clients.
    The brokerage recommended investors sell put options on
Toyota Motor Corp, lender Sumitomo Mitsui Financial
Group, Toshiba Corp and Fujifilm Holdings Corp
 with September expiry to take advantage of high implied
volatility.
    The benchmark Nikkei has fallen 18 percent since that
mulityear high on May 23, but is still up 5.2 percent since
April 4, when the Bank of Japan unveiled sweeping stimulus
measures and has risen 25 percent this year.

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