Nikkei soars to 4-1/2-yr high as Kuroda seen likely next BOJ governor

Mon Feb 25, 2013 2:22am EST

* Exporters, financials lead gains as yen tumbles
    * yen slumps to 33-month low as Kuroda's BOJ nomination eyed
    * Nomura ups end-2013 target for Nikkei to 14,500 on TPP
participation hope

    By Ayai Tomisawa
    TOKYO, Feb 25 (Reuters) - The Nikkei average soared 2.4
percent to a 53-month high on Monday with exporters leading
gains on a weaker yen, after sources said Japan was likely to
nominate Asian Development Bank President Haruhiko Kuroda, an
advocate of aggressive monetary easing, as its next central bank
governor.
    Currency-sensitive exporters led the charge after the yen
 hit a 33-month low of 94.77 yen to the dollar on Monday,
while financials and real estate companies also advanced as they
stood to benefit from reflationary policy.
    Sony Corp gained 3.4 percent, Honda Motor Co
 added 1.6 percent and Toshiba Corp rose 2.9
percent.
     The Nikkei climbed 276.58 points to 11,662.52, its
highest level since late September 2008.
    "Earlier this month, the market priced in the possibility of
(Toshiro) Muto, who is seen less aggressive, as the most
probable candidate," said Kyoya Okazawa, head of global equities
and commodity derivatives at BNP Paribas in Tokyo. But Kuroda's
emergence as the frontrunner for the top BOJ post prompted
investors to chase the market higher, he said. 
     Sources said the government is likely to nominate Kuroda
and two deputies this week for parliamentary approval. It is
also lining up Kikuo Iwata, an academic who advocates unorthodox
monetary easing steps, and BOJ Executive Director Hiroshi
Nakaso, who now oversees the central bank's international
operations, as deputy governors, a source familiar with the
process said. 
    The benchmark Nikkei has rallied nearly 35 percent since
mid-November, driven by a weaker yen as Prime Minister Shinzo
Abe pursued bold fiscal expansionary and monetary easing polices
aimed at reigniting the economy.
    Lender Mizuho Financial Group rose 2.0 percent and
Mitsubishi UFJ Financial Group advanced 2.7 percent and
were the top most and the second most traded stock, while real
estate company Mitsui Fudosan soared 6.9 percent.
    The sea transport sub-index rose 6.6 percent as
the best sectoral gainer on the main board, with Kawasaki Kisen
Kaisha Ltd jumping 12 percent and Nippon Yusen KK
 advancing 5.5 percent. A sector upgrade from Morgan
Stanley MUFG also boosted the stocks.
    The broader Topix added 1.8 percent to 980.70 in
fairly active trade, with 3.37 billion shares changing hands. It
compares with last week's average daily volume of 2.93 billion
shares. 
     
    MORE UPSIDE SEEN IN THE LONG-TERM
    Sentiment also got a lift from the Japan-U.S. summit over
the weekend in which Abe and U.S. President Barack Obama
discussed bilateral issues including economic and trade issues,
analysts said.
    The United States and Japan agreed language during Abe's
visit that could set the stage for Tokyo to join negotiations
soon on a U.S.-led regional free trade agreement known as the
Trans-Pacific Partnership. 
    "We think that the economic effects of TPP participation are
likely to be very long-term," said Hiromichi Tamura, chief
strategist at Nomura Securities.
    It sees a high likelihood of Japan participating in the TPP
agreement at some point in 2013, and raised its end-2013
forecast for the Nikkei to 14,500 from 12,500.
    Boosted by the yen's sharp fall, Japanese companies'
earnings outlook has improved sharply.
    "If the Nikkei-listed companies were to post as much as a 60
percent increase in net profit by average, the index's
price-to-earnings for the year ending March 2014 would be around
14, and the Nikkei could rise to as high as 13,000 by the
summer," said Makoto Kikuchi, the chief executive of Myojo Asset
Management.
    Still, Kikuchi added that a sharp drop in the yen could also
create negative effects for some Japanese companies and the
economy such as rising gasoline prices.
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