Nikkei eases, still heads for best April in 20 years

Mon Apr 29, 2013 11:09pm EDT

* Nikkei up 11.5 pct so far this month
    * Fanuc, Honda Motor fall after disappointing earnings
guidance
    * Nomura rises after strong quarterly earnings, sector
higher

    By Dominic Lau
    TOKYO, April 30 (Reuters) - The Nikkei average fell on
Tuesday following weak earnings guidance from Fanuc Corp and
Honda Motor, although it remains on track for its best
April performance in 20 years on the back of sweeping stimulus
measures unveiled this month.
    The Nikkei slipped 0.4 percent to 13,824.66 by the
midday break. The benchmark has risen 11.5 percent this month
and is heading for its best April performance since 1993,
largely driven by the Bank of Japan's plans to inject $1.4
trillion into the world's third-largest economy in less than two
years to revive growth.
    "One of the biggest takeaway's for the exporters in this
earnings season is the conservative FX assumptions they have
taken in their guidance for 2013," said Stefan Worrall, director
of equity sales at Credit Suisse in Tokyo. 
    "That's probably a bit disappointing. What this underscores
is that the BOJ and policymakers still have their work cut out
for them to try to convince corporate Japan that the weaker yen
is sustainable," he added.  
    Index heavyweight Fanuc Corp slumped 8.4 percent to
a three-week low after the industrial robot maker forecast a
first-half operating profit of 62 billion yen, representing only
35 percent of the full-year forecast of 175.4 billion yen by 19
analysts polled by Thomson Reuters I/B/E/S.
    It was the top-weighted loser in the Nikkei, contributing 52
negative points to the index. 
    Honda Motor Co lost 3.2 percent after the
automaker's annual operating profit estimate also came in below
market consensus. 
    Expectations that Japanese firms would sharply lift their
earnings forecasts for the fiscal year ending March 2014 had
been high after the yen weakened 22 percent since mid-November,
when Shinzo Abe, who became prime minister in December, promised
expansionary monetary and fiscal policies to boost the economy.
During the same period, the Nikkei has jumped nearly 60 percent.
    But some analysts say the impact of yen weakness on certain
exporters could be less than expected.
    "In the last five years ... Japanese exporters have been
actively trying to diversify their production, reducing their
sensitivity to yen strength," a trader said.
    "In the opposite way, it reduces the benefit to them from
the yen weakness," he added.      
    Of the 39 Nikkei companies that have reported quarterly
results, 56 percent of them came in below market expectations,
according to Thomson Reuters StarMine. That compared with 62
percent in the previous quarter.
    The broader Topix index gained 0.4 percent to
1,165.85 on Tuesday morning, with volume at 50 percent of its
full daily average of the past 90 trading days.
    
    NIKKEI RALLY A BOON TO BROKERAGES
    Nomura Holdings Inc climbed 3.3 percent after
Japan's largest brokerage reported its highest quarterly profit
in seven years as it cashed in on the surge in domestic shares
and booked a one-off gain on the sale of a property affiliate's
stocks. It was the most traded stock on the main
board by turnover.
    Rival Daiwa Securities Group Inc rose 5 percent,
while the securities sector gained 3.8 percent.
    Daiwa Securities carries a 12-month forward
price-to-earnings ratio of 17.7, below Nomura's 18.6 and the
sector's average of 19.2, according to Thomson Reuters
Datastream.
    Lender Sumitomo Mitsui Financial Group advanced 1.3
percent and was the fourth-most traded after Japan's
third-largest bank said it expected year-end net profit to rise
52 percent to a record high of 790 billion yen ($8 billion) as a
rally in domestic stock prices boosts earnings.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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