Nikkei nears 4-year high as Japan escapes G20 criticism

Mon Feb 18, 2013 2:14am EST

* Nikkei's target 11,800 seen in near term - analyst
    * Banks and real estate shares jump
    * Sector selection becomes important - Nomura

    By Ayai Tomisawa
    TOKYO, Feb 18 (Reuters) - Japan's Nikkei share average
jumped 2.1 percent on Monday, led by banks and exporters as the
yen softened after Japan escaped direct criticism of its
aggressive monetary easing at the weekend's G20 meeting.
    The Nikkei added 234.04 points to 11,407.87, close to the
4-year high of 11,498.42 it struck on Feb. 6.
    A statement issued by Group of 20 policymakers did not
single out Japan, though it said members should refrain from
competitive devaluations and that monetary policy should be
directed only at price stability and growth. 
    Investors took the G20's statement as a signal to continue
the one-way bets against the yen that paused last week before
the meeting. On Monday, the yen was trading at 94.15 to the
dollar just above a 33-month low of 94.465 struck one
week earlier.
    Exporters rose, with Fanuc Corp gaining 2.1 percent
and Toshiba Corp 2.5 percent.
    "At the G20 meeting, there wasn't as much criticism from
emerging countries about the recent yen's weakness as feared.
That spurred yen selling," said Kyoya Okazawa, head of global
equities at BNP Paribas.
    Shares in the financial and real estate sectors contributed
to the benchmark's gains as investors took the absence of G20
criticism of Japan's reflationary policies as a sign these can
be pursued without sparking friction. 
    Japan's top three banks were among the six most-traded
stocks. Mitsubishi UFJ Financial Group Inc surged 4.9
percent, while Mizuho Financial Group Inc and Sumitomo
Mitsui Financial Group Inc added 5.0 and 4.1 percent
respectively. The banking sub-index was the
best-performing sector on the main board, rising 4.8 percent.
    "We expect investor interest in Japanese stocks to rise
further as the BOJ governor appointment and BOJ's next steps
become clearer, and more details emerge of deregulation and
other proposals by the Abe administration. We see scope for
further share price gains over the next months," Natsumu
Tsujino, banking analyst at JPMorgan, wrote in a report.
    The real estate sub-index was the third best,
advancing 3.8 percent. Mitsubishi Estate Co Ltd gained
4.0 percent and Mitsui Fudosan 3.8 percent.    
    The broader Topix rose 2.2 percent to 962.69, in
slightly thinner trade, with 3.13 billion shares changing hands.
        
   MORE UPSIDE SEEN
   Yen weakness has helped the Nikkei benchmark gain about 32
percent since mid-November, when Shinzo Abe, then leader of the
opposition and now prime minister, began calling for bolder
fiscal and monetary policy to pull Japan out of deflation.
    Nomura Securities, which said that its end-2013 target for
the Nikkei remains 12,500, sees 11,800 as a potential near-term
target if the dollar trades above 95 to the yen.
    Under the current Abenomics-driven market, investors have
focused on large-cap and high-risk stocks, but with stock
selection becoming increasingly important, return-on-equity will
remain a key investment indicator, Nomura said.
    It said trading companies offer high ROE and low valuations,
and Nomura also is upbeat on machine tool makers and department
store operators.
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