Nikkei hits 52-month high; Japan Tobacco sinks

Tue Feb 19, 2013 8:08pm EST

* Orix advances on Rebeco acquisition
    * Japan Tobacco sinks, sources say govt to launch share sale
soon
    * Nikkei rises 0.7 pct, Topix adds 0.9 pct

    By Dominic Lau
    TOKYO, Feb 20 (Reuters) - Japan's Nikkei average climbed to
a 52-month high on Wednesday, boosted by Wall Street shares
edging up to near-record highs, although analysts said gains
could be limited as investors focus on who will become the next
Bank of Japan governor.
    The Nikkei advanced 0.7 percent to 11,452.02 after
trading as much as 11,510.52, its highest level since October
2008.
    Also helping to limit the Nikkei gains, Japan Tobacco Inc
 sank 3.7 percent as the top-weighted loser after
sources told Reuters that the Japanese government's $10 billion
stake in the world's third-largest tobacco company was expected
to kick off within days after bankers met on Tuesday over deal
details. 
    "Lawmakers in Japan have made it very clear that they are
comfortable with the yen 90 to 100 (to the dollar). They are
probably prefer closer to 100 than 90. They would like the
equity market to go higher in the fiscal year end (in March)," a
senior trader at a foreign bank said.
    The benchmark Nikkei is up 10 percent since the start of
this year, spurred by the yen's weakness, after rallying 22.9
percent in 2012. Most of the gains last year came in the final
six weeks after Prime Minister Shinzo Abe focused his election
campaign on lobbying the BOJ to adopt bolder monetary policy.
    Japanese equities carry a 12-month forward price-to-earnings
ratio of 13.8, a level not seen since March 2011, according to
Thomson Reuters Datastream. That compared with a 10-year average
of 16.4.
    The trader said the long-only investors, such as pension
funds, remained slow in jumping in to the Japanese market.
    "I don't think U.S. long-only have really got into this
market. They are still underweight. I think it's hedge funds and
regional accounts that have a little bit more flexibility around
their asset allocations, so we are seeing those guys."  
    Takashi Hiroki, chief strategist at Monex Inc, said
investors were unlikely to chase the Tokyo market too hard as
they would be focused on whom the government will nominate as
the next central bank governor next week.
    The government has delayed nominating a governor by a week,
fanning talk of friction between the prime minister and the
finance minister over who should run the central bank and take
aggressive action to revive the economy.    
    The broader Topix index rose 0.9 percent to 971.92
after trading as high as 1.3 percent.
    Social gaming company Gree Inc tumbled as much as
7.6 percent after mobile phone operator KDDI Corp said
in a filing that it plans to sell 3.4 percent of Gree's
outstanding shares.
    But Orix Corp gained 2.6 percent after the
financial services firm said it has agreed to buy Dutch asset
manager Robeco from its owner Rabobank in its biggest-
ever acquisition.
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