Nikkei rises above 10,000 led by exporters, financials

Tue Dec 18, 2012 10:30pm EST

* Nikkei up 1.1 pct, Topix 1.6 pct
    * Investors expand buying from exporters to financials -
trader
    * Nikkei may test high for 2012 by year-end - analyst
    * Technical charts signal "overbought" - analyst
    * Volume key to sustained market's strength - analyst

    By Ayai Tomisawa
    TOKYO, Dec 19 (Reuters) - Japan's Nikkei average rose above
the 10,000 mark for the first time in more than eight months on
Wednesday with exporters and financials leading the gains on
growing expectations of monetary easing under a new Japanese
government.
    Signs of progress in U.S. fiscal talks also boosted
sentiment and by the midday break, the Nikkei was up 1.3 percent
at 10,050.32 after rising as high as 10,060.93 earlier, its
highest level since April 3.
    Volume was high, with about 2.12 billion shares changing
hands at the midday break, compared with last week's average
daily turnover of 2.29 billion shares.    
    Analysts said investors would likely try to chase the
Japanese market higher towards the end of the year, with the
2012 high of 10,255.15 reached on March 27 a target.
    "The market is already in overbought territory, but
investors are increasingly being alarmed that there is a risk of
not having Japanese stocks in their portfolios," said Hiroichi
Nishi, general manager at SMBC Nikko Securities.
    "It's like, you are driving at 500 km per hour while the
speed limit is 100 km per hour, and even a cop cannot slow you
down."
    With the yen retreating further, exporters were in demand,
with Toyota Motor Corp adding 2.3 percent, Honda Motor
Co gaining 3.6 percent and Canon Inc soaring
4.6 percent.
    The Bank of Japan starts a two-day meeting on Wednesday
under intense political pressure to expand its asset-buying
programme aggressively to snap the world's third-biggest economy
out of its fourth recession since 2000.
    Shinzo Abe, who was elected as prime minister on Sunday,
called for the central bank to embark on "unlimited easing" and
set an inflation target of 2 percent which has driven the yen to
lows.
    On Wednesday, the dollar stood at 84.28 yen, not far
off a 20-month high of 84.55 set Monday.
    The Nikkei's recent gains took its 14-day relative strength
index to 83.24, well above 70 which is deemed overbought and
often indicates a possible near-term correction.
    The "toraku" ratio, or up-down ratio, for the first section
of the Tokyo Stock Exchange was at 152. It is calculated by
dividing the 25-day moving average of stocks that gained by the
25-day average of those that fell. A level above 120 signals an
overheated market.
    "We need to monitor if market's strength is followed with
consistent volume," said Hikaru Sato, a senior technical analyst
at Daiwa Securities. "A lot of foreign investors will be taking
Christmas holidays from later this week, so if trading volume
becomes thinner, that's when a correction may be seen."
    
    APPETITE FOR HIGH BETA STOCKS
    In the United States, hopes are high a deal will be struck
to prevent the economy from going over the "fiscal cliff", with
the White House confident of reaching an agreement.
 
    As investors gained confidence in Japanese shares on the
back of a weaker yen, they added high-beta financial shares to
their portfolios.
    The insurance sector soared 4.1 percent, being
the best sectoral performer. T&D Holdings Inc added 2.8
percent and Dai-ichi Life Insurance Co jumped 5.9
percent.
    Securities and banking shares attracted buying as well, with
Nomura Holdings advancing 4.2 percent and Mitsubishi
UFJ Financial Group soaring 5.6 percent and Sumitomo
Mitsui Financial Group adding 3.4 percent.
    "Investors are pouring in new money and expanding their 'hot
picks' from exporters to other sectors," said Naoki Fujiwara, a
fund manager at Shinkin Asset Management.
    The broader Topix index gained 1.7 percent to
831.01.
    The Nikkei is up 18.9 percent this year, with 16 percent of
that gain coming in the last five weeks as the yen weakened on
the prospect of Abe's election.