Weak yen propels Nikkei to longest run of weekly gains since 1959

Fri Feb 1, 2013 2:25am EST

* Nikkei posts 12th straight week of gains
    * Sharp up on strong profit optimism, pulls into black
    * Softbank rises on rosy earnings
    * Investors eye mid-to-long term theme in stocks - analyst

    By Tomo Uetake
    TOKYO, Feb 1 (Reuters) - Japan's Nikkei average marked its
12th straight week of gains, its longest winning streak in 54
years, as investors bought companies that sparkled during the
earnings season and stayed optimistic that a weak yen would
boost bottom lines. 
     The Nikkei, which reached 11,237.84 during Friday's
session, ended 0.5 percent up at a 33-month closing high of
11,191.34. The index gained 2.4 percent this week, giving it the
longest run of weekly gains since 1959. 
     Sharp Corp gained 5.8 percent after media reports
said the company would post its first operating profit in five
quarters in the three months through December on strong sales of
home appliances and mobile phones. 
    After the bell, Sharp reported it logged an operating profit
of 2.6 billion yen ($28.5 million) for the last three months of
2012.
    For the overall market, "earnings haven't been great so far,
but everyone had very low expectations of the last quarter,
partly because the yen only weakened at the very end of it,"
said Hirokazu Fujiki, manager of investment at Okasan
Securities. 
    "But sentiment is extremely strong at the moment. The Nikkei
has broken out of the box market it was stuck in for a lot of
January and is on its second wind. I can see that continuing
until March, but then people might do a reality check and see if
the economy is actually improving," he said.
    The Nikkei has rallied 29 percent since mid-November, when
Shinzo Abe, then a candidate for leader of the opposition and
now prime minister, started calling for aggressive monetary
policy and fiscal expansion, an economy policy now known as
"Abenomics".
    Expectations that Abe could pull Japan out of deflation and
reinvigorate its economy have driven the yen down 10 percent
against the dollar, boosting exporters. A weaker yen translates
to higher revenue when overseas sales are repatriated. On
Friday, the yen hit a 32-month low of 92.2 versus the dollar. 
    Financials and real estate, which could benefit from Abe's
reflationary policies, have nearly caught up with rises in
exporters.
    While the auto sector has gained 47 percent since
mid-November, banking has added 40 percent and real
estate has advanced 31 percent in the same period.
    Nomura Holdings Inc 's 12.8 percent increase in
operating profit for the October-December quarter disappointed
some investors hoping for larger gains from the Nikkei rally.
Nomura shares fell 2.7 percent on Friday.
    Shun Maruyama, chief Japan equity strategist at BNP Paribas,
said that investors who added exporters to their portfolios as
the yen weakened have started to shift to sectors sensitive to
the domestic economy.
    "They are looking for a mid-to-long term theme in Japanese
shares as the yen's sharp weakness will not last forever. People
are counting on stocks which are expected to fare well if the
country is out of deflation," he added.      
    The third-largest mobile carrier, Softbank Corp,
jumped 5.7 percent after posting a 23.7 percent rise in
operating profit in the latest quarter, thanks to strong iPhone
subscriptions. Softbank said it was on track to hit its annual
operating profit target of 700 billion yen ($7.76 billion) this
financial year. 
    Japan Tobacco Inc bucked the trend in firms with
high overseas exposure, booking an operating profit increase of
13.2 percent for the nine months ended Dec. 14, after expanding
its market share in Europe and maintaining sales despite the
downturn in the region. 
    Its share price jumped 4 percent after the company
maintained its operating profit forecast for the year ending
March 31 at 511 billion yen, which would be 11.3 percent above
the previous year. 
    Japanese companies have reported lacklustre earnings for the
October-December period: Of the 54 Nikkei companies that
announced quarterly results by Thursday, nearly two-thirds had
missed market expectations, according to Thomson Reuters
StarMine. That compared with 56 percent in the previous three
months.       
    But market observers said that investor focus is on
forecasts for the full current year as well as the year ending
March 2014 - if companies have a strong outlook for the
foreseeable future, the market will likely dismiss poor
quarterly results.
    The broader Topix added 0.3 percent to 942.65 in
active trade, with 3.69 billion shares changing hands. Between
January 21-25, the average daily volume was 3.44 billion shares.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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