Nikkei climbs 2.3 pct to nearly 5-yr highs; weak yen buoys exporters

Wed Apr 24, 2013 3:38am EDT

* Nikkei jumps 2.3 pct, Topix up 1.8 pct
    * Exporters lead gains, reflationary plays underperform

    By Tomo Uetake
    TOKYO, April 24 (Reuters) - Japanese shares climbed 2.3
percent to their highest level in nearly five years on Wednesday
as the yen resumed its slide towards 100 to the dollar. 
    Currency-sensitive exporters led the gains as the focus
shifts to the earnings season and the impact of a weaker yen on
profit forecasts for the rest of the year.
    The benchmark Nikkei added 313.81 points, the most
in 12 sessions, to 13,843.46, marking the highest level since
June 2008. The yen hit a low of 99.77 against the dollar on the
day, within striking distance of 100.
    "It's very hard to be bearish when the yen is traded at 99
to 100 (to the dollar). 100 yen is fantastic for the market,"
said Stefan Worrall, director of equity cash sales at Credit
Suisse.
    "A weaker yen has much more immediate impact on exporters'
earnings. Even if they unveil guidance based on a conservative
exchange rate, the benefit should be very transparent."
    Mazda Motor Corp, Kyocera Corp,
semiconductor equipment maker Tokyo Electron and TDK
Corp were up between 3.6 and 5.8 percent.
    Gains in U.S. stocks overnight on the back of strong
earnings from the likes of Netflix Inc also lifted
sentiment in Tokyo.
    However, shares in financials and asset-related firms, which
could benefit from Abe's reflationary policies, took a breather
on Wednesday and underperformed the overall market.
    Topix banking sector subindex added 0.6 percent,
while both the secu rities sector and the warehouse
and wharf operators ended up 0.5 percent each. 
    The Nikkei has surged 60 percent and the yen has weakened 23
percent versus 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.
    The broader Topix index rose 1.8 percent to 1,164.35
in active trade, with volume hitting the highest in nine
sessions as 4.60 billion shares changed hands.
    
    EARNINGS EYED
    Steelmaker JFE Holdings Inc soared 6.6 percent,
extending the previous session's 0.5 percent rise after it
returned to a recurring profit in the January to March quarter
from a loss in the year-earlier period. 
    Mitsubishi Motors Corp shot up 20 percent to a
2-1/2-month high after the company estimated its net profit for
the fiscal year ended March 31 at 38 billion yen ($383 million),
nearly triple the original forecast issued in February, citing a
weak yen and cost cuts. The carmaker will announce its FY2012/13
earnings results on Thursday. 
    After the market close, Canon Inc raised its
full-year operating profit forecast by $300 million as a
weakening yen triggered by Japan's deflation-fighting policies
inflates its overseas earnings, despite smartphones sapping
compact camera sales. Ahead of the earnings,
Canon shares added 1.3 percent. 
    Yen weakness is expected to give Japanese companies a big
lift in their earnings, especially for the current fiscal year
ending March 2014.
   "Everyone is looking to the guidance and especially how the
currency will start to have an impact," said a Tokyo-based
analyst, who declined to be identified. 
    He said retail investors were back in force, pushing up
small- and mid-cap stocks, with the Mothers index up 6.6
percent to a more than five-year high.
    Although it is still early in the latest quarterly reporting
cycle, seven of the eight Nikkei companies that have reported so
far missed market expectations, according to Thomson Reuters
StarMine. That compared with 62 percent coming in below
analysts' forecast in the previous quarter.
    "A monetary shock tends to push up personal consumption in a
relatively short run probably via wealth effects, but an upward
impact on personal consumption tends to fade out rather quickly
after two quarters," Credit Suisse wrote in a report.
    "This observation suggests that a monetary shock does not
lead to a meaningful recovery in the wage level, making
purchasing power of consumers deteriorate over a medium run."
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