Nikkei scales 6-mth high as foreign buying, pension fund plan buoy mood

Wed Nov 20, 2013 9:25pm EST

* Weekly foreign buying largest since April
    * GPIF's overhaul buoys risk appetite - trader
    * Weaker yen lifts exporters

    By Ayai Tomisawa
    TOKYO, Nov 21 (Reuters) - Japan's Nikkei share average
soared 2.0 percent to six-month highs on Thursday morning,
spurred by a jump in foreign buying and plans by a major
government fund to invest more of its $2 trillion funds in
riskier assets.
    The Nikkei added 294.10 points to 15,370.18 in
mid-morning trade, also helped by a weaker yen spurring
exporters higher. The index rose as high as 15,377.00 earlier,
the best mark since May 23.
    The Topix gained 0.9 percent to 1,244.68.
    Foreign investors' weekly net buying of Japanese equities
jumped to 1.295 trillion yen ($13 billion) last week, the
biggest amount in seven months, data from the Ministry of
Finance showed. In the previous two weeks, they bought 522.4
billion yen in Japanese equities. 
    "We saw a big rally last week, but the figure surprised the
market as it exceeded 1 trillion yen," said Hikaru Sato, a
senior technical analyst at Daiwa Securities.
    Last week, the Nikkei jumped 7.7 percent as strong earnings,
led by financials, and a weaker yen as well as dovish remarks
from incoming Fed Chief Janet Yellen boosted risk appetite.   
    Exporters raced ahead with the dollar staying comfortably 
above 100 yen as minutes from the Fed's Oct. 29-30 
meeting showed officials felt they might be able to start
scaling back the bank's stimulus program at one of its next few
meetings. 
    Honda Motor Co rose 2.6 percent, Sony Corp 
gained 1.4 percent and Nikon Corp climbed 2.9 percent.
    Also lifting the mood was news the Government Pension
Investment Fund (GPIF), the world's biggest pension fund, is
planning to plough more of its $2 trillion in public funds in
stocks and other riskier assets.  It would mark the most
ambitious overhaul since its creation more than a decade
ago. 
   "We think the (GPIF) proposals are long on what is really
needed to sustain a structural bull market: qualitative focus on
better returns," said Jesper Koll, director of equities research
at JP Morgan.
    Another trader at a Japanese brokerage said: "There are also
expectations that the GPIF will look into stocks in the new
JPX-Nikkei Index 400, and such hopes are lifting these small
stocks as well."  
    The new index, which will showcase companies with high
return on equity and robust corporate governance, will start
operation next year and include fast-growing companies and
small-cap stocks.
    E-commerce giant Rakuten Inc has risen around 10
percent since the ROE index was announced last week and Seria Co
Ltd, operator of a 100 yen-shop chain, has jumped 12
percent, outpacing the 7.1 percent rise in the Nikkei over the
same period.
    Rakuten gained 1.0 percent while Seria soared 2.6 percent.
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