Nikkei gains on BOJ governor hope, but futures trade suspension trims gains

Mon Mar 4, 2013 2:24am EST

* Nikkei rises 0.4 pct, Topix up 0.8 pct
    * Futures trading suspension dents mood
    * Real estate firms, financials lead rally

    By Ayai Tomisawa
    TOKYO, March 4 (Reuters) - Japan's Nikkei average closed up
0.4 percent on Monday after briefly hitting a 53-month high as
the government's nominee for central bank governor outlined a
forceful policy to defeat deflation.
    Gains on the index, led by real estate and financial firms,
were trimmed by a suspension of futures trading on the Osaka
Securities Exchange due to technical problems. 
    The Nikkei ended at 11,652.29, after reaching as
high as 11,767.68, the highest level since September 2008, after
nominee Haruhiko Kuroda said he would not set any limits on the
amount of cash the Bank of Japan pumps into the economy.
    Traders said stocks would have risen even higher had the
trade in Nikkei futures, options and some derivative products
not been suspended in Osaka. 
    "Investors who were engaging in arbitrage trades between
futures and cash had to stay on the sidelines when futures and
options trading was halted," said Hiroyuki Fukunaga, the chief
executive of Investrust. 
    "As soon as trading was suspended, investors started to lock
in profits, and the Nikkei was trimming gains. If that incident
didn't happen, the index could have moved towards 11,800."
    Prime Minister Shinzo Abe's policies, combined with monetary
stimulus and fiscal stimulus, have buoyed investors' risk
appetites and have lifted the Nikkei by more than 12 percent
this year.
    On Monday, Kuroda told lawmakers the BOJ's current policies
were not powerful enough to boost inflation to 2 percent, a
target he said the central bank should strive to achieve in two
years. 
    "It's not like Kuroda will ease monetary policy every month,
but investors are comfortable with having Japanese stocks in
their portfolios as they are convinced that there will be easing
for sure," said Shun Maruyama, chief strategist at BNP Paribas.
    The real estate sector was the third-best
sectoral performer, gaining 3.4 percent. Sumitomo Realty &
Development jumped 3.9 percent and Mitsubishi Estate
 climbed 3.6 percent.
    The sector has climbed about 58 percent since mid-November,
outpacing a nearly 35 percent rally in the Nikkei, after Abe
embarked on bold fiscal expansionary policies to fight Japan's
chronic deflation. 
    Financials were stronger as well, with Mitsubishi UFJ
Financial Group advancing 1.5 percent and Sumitomo
Mitsui Financial Group climbing 1.7 percent.
    
    Weaker yen 
    The broader Topix gained 0.8 percent to 992.25 while
some exporters also got a helping hand from a weaker yen, which
lost 1 percent to 93.685 to the dollar on Friday after upbeat
U.S. data.
     U.S. manufacturing activity expanded last month at its
fastest clip in 20 months, while U.S. consumer sentiment also
rose in February as Americans turned more optimistic about the
job market.  
     Such signs of growth would help Japan's export-oriented
economy, UBS said, as it upgraded Japanese equities to 'neutral'
from 'underweight' in its global portfolio model.
    "Whilst we are relatively sceptical on the ability of the
administration to generate inflation and economic growth, we see
a likely period of continued reflationary rhetoric and
supportive news flow ahead of the summer elections for the upper
house," UBS strategists said in a note.
    "The broader improvement in the U.S. economy and pick up in
durables goods orders should help Japan, particularly with the
weaker yen, over a longer-term horizon." 
    Sony Corp added 3.5 percent while Toshiba Corp
 rose 1.2 percent.
    Volume on the Tokyo exchange was moderate, with 3.12 billion
shares changing hands, compared to last week's average daily
volume of 3.32 billion shares.
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