Nikkei jumps 1.9 pct to nearly 5-yr high as Japan's policies get G20 pass

Sun Apr 21, 2013 11:20pm EDT

* Exporters lead gainers as yen nears 100-mark to dollar
    * All of the 33 sectors on Topix rise
    * Mitsui Eng jumps 13.6 pct on report of merger talks
Kawasaki Heavy

    By Tomo Uetake
    TOKYO, April 22 (Reuters) - The Nikkei share average climbed
1.9 percent to a near five-year high on Monday morning, with
exporters surging as the yen weakened after the Group of 20
leading economies stopped short of criticising Japan's sweeping
monetary expansionary policies.
    At the midday break, the Nikkei was up 258.23 points
at 13,574.71 after trading as high as 13,611.58, its highest
level since June 2008. It briefly broke above the 13,608.19
mark, a settlement price of options contracts, known as "options
SQ", expiring this month on April 12.
    "Although the yen hasn't seen 100 against the dollar yet,
the market's expectation for further depreciation is high, and
thus  the stocks are performing so well," said Hiroyuki
Fukunaga, the chief executive of Investrust.
    Major exporters charged higher as the dollar firmed against
the yen to within a whisker of 100 after the G20 refrained from
singling out Tokyo's reflationary policies as some in the
markets had feared.
    The yen last traded at 99.79 to the dollar. A weaker
yen inflates exporters' overseas earnings when repatriated.   
    Toyota Motor Corp rose 2.2 percent and was the
third most-traded on the main board by turnover, while rival
Mazda Motor Corp soared 6.3 percent. Canon Inc
, TDK Corp and Olympus Corp were up
between 2.4 and 5 percent.
    In a communique after a two-day meeting, the G20 simply said
it would be "mindful" of possible side effects from extended
periods of monetary stimulus.
    The Bank of Japan on April 4 stunned financial markets by
announcing a sweeping monetary expansion programme aimed at
breaking a deflationary cycle and ending two decades of
stagnation, promising to inject $1.4 trillion into the world's
third-largest economy in less than two years.
    "I worried that the G20 countries would criticise Japan's
easing monetary policies," said Ryota Sakagami, chief strategist
at SMBC Nikko Securities.
    "The market uptrend will continue ... I think sooner or
later the Nikkei will reach 14,000. For the moment, the one
concern is still the weak global economy, especially the weak
U.S. macro economic indicators."
    Sakagami said domestic-focused companies were likely to
outperform exporters in the next few months, although the yen's
weakness has lifted the appeal of export-driven firms on Monday.
    The broader Topix index advanced 1.9 percent to
1,148.52 by the midday break, with volume at 71 percent of its
full daily average for the past 90 trading days. All of the 33
sectors on the Topix posted gains.
    
    MITSUI ENGINEERING JUMPS
    Mitsui Engineering & Shipbuilding Co Ltd jumped
13.6 percent to a near two-year high after the Nikkei newspaper
said Mitsui and Kawasaki Heavy Industries Ltd were set
to begin merger talks. Shares of Kawasaki Heavy edged up 1.8
percent.
    Financials, which are expected to benefit from the
reflationary drive, were also in demand, with Nomura Holdings
, Japan's top brokerage, up 3 percent and Mitsubishi UFJ
Financial Group adding 2.5 percent.
    The benchmark Nikkei has rallied 57 percent and the yen has
weakened 23 percent against the dollar since mid-November, when
Shinzo Abe, who became Prime Minister in December, promised bold
 monetary and fiscal expansionary policies during his election
campaign.
    In terms of valuations, Japanese equities carry a 12-month
forward price-to-earnings ratio of 14.7, a level not seen since
June 2010 but still below its 10-year average of 16.4, according
to Thomson Reuters Datastream.