Nikkei hits new 32-month high on Softbank, Yahoo; weaker yen supports

Tue Jan 29, 2013 10:32pm EST

* Nikkei hits new 32-month high on weaker yen
    * Yahoo Japan jumps on share buyback, earnings and div
forecast hikes
    * Canon, SMFG, Nintendo results in focus

    By Ayai Tomisawa
    TOKYO, Jan 30 (Reuters) - Japan's Nikkei share average rose
to a new 32-month high on Wednesday, led by gains in Softbank
Corp and Yahoo Japan Corp on optimistic profit
expectations while earnings-related news dominated the market as
investors awaited trading cues from the corporate sector.
    A weak yen also lifted the Nikkei briefly above the 11,000
mark, to hit a new 32-month high of 11,004.48 before ending up
1.1 percent at 10,990.77 by the midday break.
    Analysts said that investors bought dollar-yen after the
Ministry of Finance released data on Wednesday showing that the
country's trade deficit topped 1 trillion yen for the first 10
days of January.
    "The data pressured the yen, but for now, 11,000 seems to be
the upside limit until investors confirm corporate earnings,"
said Hikaru Sato, a senior technical analyst at Daiwa
Securities. "We need more catalysts to see the Nikkei
comfortably rising further," he said.
    With quarterly earnings for the October-December period in
the spotlight, analysts said that investors were focused on
prospects for the fiscal year ending March 2014 as they start
scrutinising companies' financial details such as how far a
recently weak yen can push up bottom lines.
    Softbank rose 1.5 percent, being the five most traded stocks
on the main board by turnover, after Dish Network Corp 
 decided against filing to block Sprint Nextel 
Corp's proposed deal with Softbank, at least for now.
 
    A Nikkei report that the mobile phone carrier likely  
generated a group operating profit of about 590 billion yen 
($6.51 billion) for nine months ended December is serving as a
tailwind, traders said.
    "Before, investors were like, 'just buy bellwether Japan
stocks', but now they are being selective," said Hiromichi
Tamura, chief strategist at Nomura Securities. "Many of them
still want to add more Japanese shares to their portfolios, and
companies that are reporting strong results and forecasts are in
focus."
    Yahoo Japan jumped as much as 21.4 percent to a four-year
high of 38,600 yen after it said it planned to buy back up to 20
billion yen ($221 million) of its own shares, or 1.4 percent of
its issued stock. 
    The company lifted its full-year operating profit forecast
to a range of 179.30 billion yen to 181.70 billion yen from a
previous estimate of between 173.30 billion and 177.00 billion
yen, citing stronger advertising sales. It also raised its
annual dividend forecast to a range of 382-387 yen per share
from a previous forecast of 370-378 yen.
    "Investors have shifted their focus to prospects for the
full-year (ending this March) as well as next year (through
March 2014)," said Hiroichi Nishi, an assistant general manager
of equity investment at SMBC Nikko Securities.
    Komatsu Ltd was up 1.9 percent after falling as
much as 3.8 percent as the world's second-largest maker of
construction machinery cut its annual operating profit forecast
for a second time this financial year as demand for mining
equipment in Indonesia fell. 
    "Even if some earnings disappoint the market, the impact on
the overall market should be limited because investors will
probably buy shares on dips as fundamental sentiment is being
supported by 'Abenomics'," Nishi said.
    Companies reporting results later on Wednesday include
Nintendo Co, Sumitomo Mitsui Financial Group 
and Canon Inc.
    Investors have been piling into the Japanese market in the 
hope that "Abenomics", Prime Minister Shinzo Abe's brand of 
economic policy involving aggressive monetary easing and a 
weaker yen, will boost such stocks as exporters and financials.
    The Nikkei has risen about 27 percent since mid-November, 
when Abe, then a candidate for leader of the opposition 
and now prime minister, began calling for aggressive monetary 
easing.
    The broader Topix gained 0.9 percent to 928.75 by
the midday break.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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