Nikkei soars on exporters amid hopes for BoJ's easing

Thu Jan 17, 2013 8:46pm EST

* Exporters up on hopes their earnings will improve on yen
drop
    * Credit Suisse upgrades Japan on short-term
    * Nikkei on track to log gains for 10th straight week

    By Ayai Tomisawa
    TOKYO, Jan 18 (Reuters) - Japan's Nikkei share average rose
more than 2 percent on Friday as exporters gained on
expectations that the central bank will ease monetary policy
aggressively next week, putting more downward pressure on the
yen.
    The Nikkei rose 2.1 percent to 10,831.26 points in
mid-morning trade. If it ends above Tuesday's 10,879.08, it will
be the highest close in 32 months. The index is on track to log
gains for the tenth straight week, its longest winning run since
1987.
    Citing sources familiar with the central bank's thinking, 
Reuters reported on Thursday that the BoJ next week will 
consider removing the 0.1 percent floor on short-term interest 
rates and commit to open-ended asset buying until the 2 percent 
inflation target is reached. 
    Exporters led the gains, with Toyota Motor Corp 
adding 2.0 percent, Honda Motor Co gaining 3.6 percent
and Panasonic Corp advancing 3.2 percent.
    "There still is strong expectations on 'Abenomics'," said 
Hiroichi Nishi, assistant general manager of equity information 
department at SMBC Nikko Securities. 
    The Nikkei has rallied about 25 percent over the past two 
months, when Prime Minister Shinzo Abe started calling for
further policy easing, causing the yen to weaken.
    Nishi added that the market is increasingly encouraged by 
the prospect of exporters' earnings growing at a better pace in 
the coming years. 
    Credit Suisse upgraded Japan to 5 percent overweight on a
short-term basis from the benchmark level, with a year-end
target of 12,000 on the Nikkei.
    "Fiscal and monetary policy are increasingly proactive: the
BoJ's balance sheet is set to expand in 2013 by more than those
of other central banks, even before the potential change in the
BoJ inflation target (up to 2 percent)," analysts wrote in a
report.
    On Thursday, the yen fell to a more than 2-1/2-year low of
90.14 yen to the dollar. The yen last traded at 89.84 yen 
to the dollar. A weak yen lifts exporters' overseas earnings
when repatriated.
    "Foreign investors are becoming increasingly eager to add
more Japanese stocks," said Tetsuro Ii, the chief executive of
Commons Asset Management.
    "Abe has been successful in lifting investor sentiment. A
good result must be delivered, and we still don't know about
that, but the fact that he boosted investors' risk appetites is
very positive." 
    The central bank's policy meeting is scheduled on Jan. 
21-22.
    Topix added 1.8 percent to 906.50.