Japan's Nikkei dips, ends four-session winning streak

Tue Nov 20, 2012 1:38am EST

* Investors pocket gains in exporters, switch into telecoms
    * Shippers up, tracking gains in Baltic shipping index

    By Dominic Lau
    TOKYO, Nov 20 (Reuters) - The Nikkei ended a four-day
winning run on Tuesday as investors took profits in exporters,
which had rallied on hopes Japan's main opposition party would
win next month's election and pressure the central bank for more
stimulus steps.
    But losses were limited as investors switched into sectors
which have lagged the rally, such as telecoms and retailers.
    The Nikkei ended 0.1 percent lower at 9,142.64 after
surging 5.7 percent in the previous four sessions, driven by a
call by Liberal Democratic Party leader (LDP) Shinzo Abe for the
Bank of Japan to further stimulate the ailing economy, including
pushing interest rates to zero or below zero.
    His campaign has weakened the yen against the dollar,
fuelling a bounce in the shares of Japanese exporters, which
face sluggish demand for their products amid stuttering global
growth.
    Exporters that came under pressure on Tuesday included Canon
Inc, Honda Motor Co, TDK Corp and
construction machinery maker Komatsu Ltd, all down
between 0.9 and 1.1 percent. 
    Panasonic Corp sagged 3.8 percent as investors
locked in profits and after Deutsche Bank cut its target price
on the consumer electronics maker.
    "A lot of the sectors have been overbought out there ...
It's just a healthy consolidation," a senior dealer at a foreign
brokerage said. "There are still a lot of expectations for the
LDP." 
    In its last meeting before the Dec. 16 election, the Bank of
Japan kept monetary policy steady on Tuesday, standing its
ground for now in the face of calls from the country's likely
next prime minister to pursue "unlimited" easing.
 
    "Investors have started to review what Abe has said and are
being careful not to have too many expectations for everything
he has said," said Takuya Takahashi, a market analyst at Daiwa
Securities. "The market is sceptical that the BOJ would give in
to every demand." 
    The broader Topix index was flat at 762.04 in
relatively active trade, with 1.87 billion shares changing
hands, down from Monday's 2.01 billion but up from last week's
average of 1.79 billion.
    
    ROTATION
    Mobile operators Softbank Corp and KDDI Corp
 rose 1.9 and 0.7 percent respectively, while index
heavyweight Fast Retailing, the owner of casual fashion
chain Uniqlo, added 0.3 percent.
    Shippers rose 1.8 percent as the top performing
sector after the Baltic Exchange's main sea freight index
, which tracks rates for ships carrying dry bulk
commodities, rose for a seventh straight day on Monday after
increased rates in the capesize and panamax shipping segments.
    Morgan Stanley MUFG said Japanese equities would benefit
from a weaker yen through the expected rise in company earnings
per share. The benchmark Nikkei is up 8.1 percent this year,
lagging a 10.3 percent rise in the U.S. S&P 500 and a 9.8
percent gain in the pan-European STOXX Europe 600. 
    "Under a weaker yen scenario, we prefer IT, industrials,
discretionary and financials over staples," the brokerage said
in a note.
    But it added that a soft yen and setting an inflation target
would not be enough to change investors' expectations for
longer-term return on equity (ROE) or growth in Japan. "The
latter depend on fiscal improvement, and on higher nominal GDP,
tax revenue and wages," it added.
    Japanese stocks carry a 12-month forward ROE of 7.3 percent,
much lower than S&P 500's 15 percent and STOXX Europe 600's
12.5, data from Thomson Reuters Datastream showed.
    Within the financial sector, NKSJ Holdings sank 4.4
percent after the non-life insurer forecast a full-year net loss
of 28 billion yen ($345 million), versus its previous estimate
of a profit of 24 billion yen, to reflect a lower assumption for
net capital gains due to an increase in impairment losses.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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