Nikkei hits highest close since June 2008; Canon, Nintendo sink

Thu Apr 25, 2013 3:29am EDT

* Nikkei rises above 13,900 for first time in 58 months
    * Expectations for weak yen buoy market
    * Canon, Nintendo suffer as investors disappoint with
guidance
    * Shiseido falls after writing down $1.9 bln U.S.
acquisition

    By Tomo Uetake
    TOKYO, April 25 (Reuters) - The Nikkei share average climbed
to a fresh, almost five-year high on Thursday, but the mood was
tempered by sharp losses for Canon and Nintendo after they
failed to meet investors' expectations of strong earnings
guidance.
    Market analysts had expected Japanese companies to
aggressively raise their earnings guidance after the yen
weakened more than 14 percent this year, driven by bold
government and central bank policies to revive growth.
    Still, investors remained optimistic about Tokyo stocks on
the view that the yen - which last traded at 99.13 to the
dollar - still has room to weaken. That helped gave a lift to
blue-chip stocks in late trading on Thursday.
    "There is market talk and expectations that substantial
USD/JPY options expiries at 100 yen, due later today, would
trigger the next leg in the yen's weakness," said Mitsushige
Akino, executive director and chief fund manager at Ichiyoshi
Asset Management.
    The Nikkei closed 0.6 percent higher at 13,926.08
after trading as high as 13,974.26, its highest level since June
2008. The index jumped 2.3 percent on Wednesday.
    Among blue-chip exporters, Toyota Motor Corp gained
2 percent, Panasonic Corp advanced 1.7 percent and TDK
Corp added 3.6 percent.
    But Canon Inc sank 6.4 percent, retreating from a
one-year high. The maker of cameras and printers raised its
annual operating profit forecast by nearly 10 percent to 450
billion yen ($4.5 billion), but below a market consensus of 510
billion yen. It was the top-weighted loser and the most traded
stock on the main board by turnover. 
    Rival Nikon Corp retreated 3.7 percent.
    Nintendo Co Ltd tumbled 5.9 percent after the
gaming company reported an operating loss of 36.4 billion yen in
the fiscal year ended March 31, deeper than a consensus estimate
of a 12 billion yen loss. 
    Shiseido Co Ltd was the sixth top-weighted loser in
the Nikkei, losing 4.1 percent. The cosmetics company forecast
its first net loss in eight years after saying it would write
down the $1.9 billion acquisition of the U.S. company Bare
Escentuals due to disappointing sales.    
    The broader Topix index rose 0.7 percent to 1,172.78
in active trade, with 4.36 billion shares changing hands. That
was higher than last month's average trading volume of 3.24
billion shares and last week's average trading volume of 4.07
billion.
    BULLISH ON JAPAN
    Investors remained upbeat on the outlook for Japanese
stocks, although government data showed foreign investors were
net sellers of Japanese equities last week, with a net outflow
of 27.9 billion yen after they bought 1.57 trillion yen of
equities in the previous week.    
    "Dollar strength is a headwind for emerging markets equities
and we would use a bounce to reduce exposure further. Japan is
our favourite equity market," Trevor Greetham, director of asset
allocation at Fidelity Worldwide Investment, wrote in a note.
    "Japan benefits from dollar strength and it has very
positive domestic policy settings from an equity investors'
point of view."
    In terms of valuations, Japanese equities carry a 12-month
forward price-to-earnings ratio of 14.9, a level not seen since
June 2010 but is still below its 10-year average of 16.3,
according to Thomson Reuters Datastream.
    The benchmark Nikkei has rallied 61 percent since
mid-November, when Shinzo Abe, who became prime minister in
December, promised expansionary monetary and fiscal policies to
revive the world's third-largest economy.
    The Bank of Japan is expected to stand pat at its
policy-setting meeting on Friday after it unveiled sweeping
stimulus measures earlier this month.