Nikkei edges up; soft yen and BOJ hopes offset profit warnings

Wed Oct 24, 2012 10:14pm EDT

* KDDI gains in heavy trade in spite of weak earnings
    * Nintendo cuts f'cast, but stock's fall softened by new Wii
    * Soft yen and hopes of easing support the market

    By Sophie Knight
    TOKYO, Oct 25 (Reuters) - Japan's Nikkei share average
inched up in early Thursday trade as a weaker yen and
expectations of further monetary easing by the Bank of Japan
offset cuts in guidance from Nintendo Co Ltd and other
firms. 
    KDDI Corp was the most-traded share by turnover,
rising 4.8 percent to a 1 year-high, in spite of logging a
first-half drop in operating profit, with analysts noting that
the mobile operator seemed confident of two-digit operating
profit growth in the next business year.
    The Nikkei added 0.5 percent to 8,999.17 after
snapping a seven-day winning streak on Wednesday.
    "There are lots of companies whose downward revisions were 
much wider than expectations," said Yasuo Sakuma, portfolio
manager at Bayview Asset Management.
    "But it's a tug of war between poor corporate earnings and
the softer yen."
    Masayuki Doshida, senior market analyst at Rakuten
Securities, said the market was likely to hold onto its recent
gains until the Bank of Japan's policy meeting on Oct. 30, when
investors expect policymakers to increase its asset-buying
scheme and to discuss future steps. 
    "There is a very strong wait-and-see feeling at the moment
and most people are playing individual stocks rather than the
market as a whole," he said.
    Weak Japanese earnings had been flagged by underwhelming
results from U.S. firms, particularly in the tech sector, and
market participants said this had been mostly factored in.
    A more attractive exchange rate also helped even firms that
slashed their outlook to advance.
    One of those was Nidec Corp, which gained 5.4
percent despite cutting its annual operating profit forecast by
16 percent. Management said it would implement emergency
profit-boosting measures.
    Investors were relatively unperturbed by Nintendo Co Ltd's
 deep forecast cuts, in the hope that its new Wii
console will spur growth. The stock dropped 1.1 percent after
the video games maker cut its annual profit outlook to 20
billion yen ($251 million) from the 35 billion yen forecast in
July. 
    "There are much fewer people holding this stock compared to
a year ago, hardly any institutional investors," said Sakuma of
Bayview Asset Management. "The share was even positive for a
while  -- it's as if people don't really care what the stock
does."
    Sharp Corp, whose share price had lost 75 percent
for the year to date through Wednesday, sagged a further 4.8
percent after the Nikkei business daily said the company is
likely to log a first-half loss of around $5 billion, almost
double that projected in August, due to restructuring costs.
 
    So far, 9 out of the 12 Nikkei companies that have reported
earnings have come in under analysts' expectations, with some
fearing the worst is yet to come from exporters saddled with a
strong yen that erodes overseas revenue when repatriated. 
    Some firms have managed to buck that trend. Mitsubishi Motor
Corp hiked its first-half operating profit forecast by
3 percent to 30.8 billion yen, helping the stock rise 2.9
percent.
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