April 16, 2019 / 6:55 AM / 4 months ago

Nikkei hits 4-mth high on rally in mobile carriers, Topix soft

* Nikkei climbs to its highest level since Dec. 4

* Speculative buying pushes up N/T ratio

* Mobile firms up as Docomo unveils smaller-than-feared price cuts

* Retailers remain weak on tax worries, 7&i hits 5-year low

By Tomo Uetake

TOKYO, April 16 (Reuters) - Japan’s Nikkei edged up to a fresh four-month high on Tuesday, propelled by gains in the big three mobile carriers after market leader NTT Docomo announced smaller-than-feared price cuts, soothing concerns about a price war.

The benchmark Nikkei rose 0.24 percent to 22,221.66, hitting a fresh four-month high but the broader Topix ended down 0.09 percent at 1,626.46.

The information and communication sub-index was by far the strongest among the Topix’s 33 industry groups, gaining 1.7 percent.

NTT Docomo jumped 3.6 percent, while rival and one of the Nikkei heavyweights KDDI Corp surged 5.9 percent and SoftBank Corp advanced 3.1 percent.

After market close on Monday, NTT Docomo said it would cut carrier fees by up to 40 percent. Yet, many of its users will not see reductions of that scale and the new price plans, widely seen as complex, do not include handset fees.

“We don’t see a large negative impact on (NTT Docomo’s) earnings and see a low probability of other companies responding with large price cuts,” SMBC Nikko analyst Satoru Kikuchi wrote in a note.

Japan’s big three telcos, which have a combined market cap of about 20 trillion yen ($178.7 billion), have been under government pressure to reduce carrier fees to help stimulate consumer spending in other parts of the economy.

Stripping out their gains, the market was soft with sentiment hardly cheerful.

Retailers were particularly weak, amid worries about the planned consumption tax hike in October, with Seven&i slipping 1.2 percent to five-year lows.

“The ongoing rally in the Nikkei is not supported by broad economic growth or fundamentals, but rather by ample liquidity and speculation,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Fujito said the benchmark Nikkei had been buoyed over the past few weeks by a couple of heavyweight stocks, namely Fast Retailing and SoftBank Group.

“If you look back, some speculative hedge funds apparently pushed up the Nikkei artificially by buying up heavyweights Fast Retailing and SoftBank Group. If they decide to take profit, it can reverse course anytime soon - unless the markets see solid hard data to back up a further run-up.”

In a sign of the market distortion, the Nikkei/Topix (NT) ratio edged up to 13.66, the highest close this century.

$1 = 111.93 yen Additional reporting by Hideyuki Sano; Editing by Jacqueline Wong

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