Nikkei hits new 5-1/2-yr high on weak yen; financials, exporters lead

Mon May 13, 2013 3:02am EDT

* Volume highest in 5 weeks
    * With USD/JPY assumption at 100, profits to rise 28 pct -
analyst
    * Nikkei may reach 15,000 this week - brokers

    By Tomo Uetake
    TOKYO, May 13 (Reuters) - Japan's Nikkei share average
surged to a fresh 5-1/2-year high on Monday as the weakening yen
further bolstered exporters, while brokerage shares attracted
buyers who see growing volume  bringing in much more fee income.
    The benchmark Nikkei rose 1.2 percent to 14,782.21,
its highest closing level since late December 2007. During the
session it climbed as high as 14,849.01.
    The index has gained 42 percent this year, helped by Prime
Minister Shinzo Abe's growth policies and the Bank of Japan's
aggressive monetary easing.
    The Japanese yen broke below the 102 mark to the
dollar on Monday, its weakest level since October 2008, after
Tokyo escaped direct criticism of its aggressive monetary easing
programme at the Group of Seven meeting over the weekend.
    "There is increasing demand for Japanese exporters from
foreign investors," said Kyoya Okazawa, head of global equities
at BNP Paribas in Tokyo.
    He added that the Nikkei will probably reach 15,000 as soon
as this week, helped by gains in exporters such as automakers
and electronics manufacturers.
    The earnings season is in full swing, and the yen's fall
enables Japanese exporters to earn more from foreign currency
profits. 
    On Monday, blue-chip exporters soared, with Nissan Motor Co
 jumping 4.5 percent, while both Toyota Motor Corp
 and Sony Corp ended up 3.8 percent each.
    Panasonic Corp advanced 7.6 percent after the
company said its operating profit will likely jump 55.3 percent
this fiscal year.
    Hitachi Ltd surged 7.8 percent after the
electronics conglomerate forecast an 18.5 percent jump in
operating profit for this fiscal year, citing a weaker yen and
cost cuts.
    Market participants say some exporters are reporting overly
conservative forecasts for the current year to March, and
investors expect many companies to raise their earnings guidance
this fiscal year.
    Even though the yen last traded at 101.71 yen to the dollar,
the likes of Panasonic, Toyota Motor and Sony Corp based their
foreign exchange assumptions at 90 yen to 95 yen against the
dollar.
    Among 1,394 companies reporting their full-year earnings,
they based their dollar-yen assumptions at an average 92 yen and
forecast an average of 21 percent growth in their operating
profits for this fiscal year to March, said Tomochika Kitaoka,
strategist at Mizuho Securities.
    "But if the dollar-yen assumption is raised to 100 yen, a
gap between companies' estimates and analysts' figures will be
filled...their operating profits are expected to rise about 28
percent on year," Kitaoka said.
    The Topix gained 1.8 percent to 1,232.20 in very
active trade, with volume hitting the highest since April 5 as
5.30 billion shares changed hands. That compared with last
month's daily average volume of 4.31 billion shares.
    The securities sub-index, which soared 7.6
percent, was the best sectoral performer on hopes of an increase
in commission fees from the booming market. Nomura Holdings
 jumped 9.6 percent and Daiwa Securities surged
8.3 percent.
    The banking sector added 4.4 percent and other
financials gained 4 percent.         
    "Even though some profit-taking was seen due to signs of
overheating, the market ended up posting strong gains. I won't
be surprised if the Nikkei reaches 15,000 this week," said
Hiroaki Hiwada, a senior strategist at Toyo Securities.
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