Nikkei hits new 8-week high on weak yen, election hopes; Sharp soars

Thu Jul 18, 2013 9:28pm EDT

* Investors are 'risk on', but caution as overbought signs
loom - analyst
    * Nikkei may break above 15,000 - analyst
    * Sharp soars on hopes for bolstering financial base through
fund raise

    By Ayai Tomisawa
    TOKYO, July 19 (Reuters) - Japan's Nikkei share average
extended its gains into a sixth day and rose to a new eight-week
high on Friday, helped by advances on Wall Street and a
weakening yen, while expectations of a ruling party victory in
this weekend's upper house election supported sentiment. 
    The Nikkei rose 0.6 percent to 14,898.38 in
mid-morning trade after climbing as high as 14,953.29, the
highest intraday level since May 24.
    "The Nikkei may breach 15,000 later in the day as it's an
inch away," said Yoshiyuki Kondo, an analyst at Daiwa
Securities.
    But he noted that the Nikkei, after rising for six straight
days, could soon shows signs that the market is overbought.
    "Most investors are taking a 'risk on' stance on improving
market conditions, but there is a bit of caution against the
steep rise in the market," Kondo said.
    The Nikkei is trading 8 percent above its 25-day moving
average of 13,807.47.
    Exporters were in demand as the dollar last traded at 100.79
yen, breaking above Thursday's session high of 100.65
yen.
    Panasonic Corp rose 1.5 percent, Toshiba Corp
 added 1.0 percent and Toyota Motor Corp gained
0.7 percent.
    Sharp Corp climbed 5 percent after Kyodo news
agency said the company plans a public offering of 90 billion
yen by end-September, while two sources familiar with the matter
told Reuters that it plans to raise 10 billion yen through a
share sale to housing appliance maker Lixil Group Corp.
 
    "The fact that they (Sharp) are going to get funds from
direct investment from other companies seems a very positive
thing. It's non-dilutive to a degree," a Tokyo-based trader
said. "It's dilutive on an EPS basis and dividend, but they
don't pay a dividend, so nobody cares." 
    The Topix gained 0.2 percent to 1,224.49.
    U.S. stocks closed at record highs on Thursday on strong
corporate earnings, while Congressional testimony by Federal
Reserve Chairman Ben Bernanke on monetary policy further
reassured markets.
    In the domestic market, hopes for an economic recovery are
boosting investors' appetites, while Prime Minister Shinzo Abe's
Liberal Democratic Party-led bloc is expected to win a hefty
majority in the upper house election on July 21.
    That victory, if it occurs, would end the "twisted Diet" in
which the opposition controls the upper chamber, giving Abe more
freedom to push "Abenomics", his aggressive monetary easing and
government spending policies.
    "The market welcomes the end of a twisted Diet as it would
make it easier to pass legislation and there are hopes that the
government will implement an effective growth strategy soon,"
said Yutaka Miura, a senior technical analyst at Mizuho
Securities.
    With the April-June earnings season around the corner,
analysts said expectations of higher profits were growing as the
yen weakened, improving export earnings.
    The Nikkei has dropped around 7 percent since the year's
peak on May 23, but is still up 43 percent this year.
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