Nikkei drops to 1-week low on halt of pension buying, soft Wall St

Mon Jul 7, 2014 10:03pm EDT

* No follow-through buying after end of pension funds'
buying
    * Nikkei holds above 25-day average
    * Insurance companies lead losses

    By Hideyuki Sano
    TOKYO, July 8 (Reuters) - Japanese shares fell to one-week
lows on Tuesday, pressured by an apparent halt in buying by
public pension funds, losses on  Wall Street and caution ahead
of corporate earnings.
    Japan's Nikkei share average fell 0.8 percent to
15,261.68 points by late morning, touching its lowest level in a
week, though it was still holding above major support from its
25-day moving average around 15,195.
    "The market has been capped lately as people think that
buying by pension funds has come to an end," said Hideyuki
Ishiguro, senior strategist at Okasan Securities.
    Reuters reported last month that three Japanese semi-public
pension funds were buying stocks aggressively but that their
buying could come to an end by the end of June. 
    In one evidence of weak buying momentum in Tokyo markets,
technical charts on the Nikkei have shown four straight days of
black candlesticks until Monday, which means the market closed
below the day's opening level.
    In other words, in the last four sessions, while a rally in
global share prices had helped to lift Tokyo shares initially, 
prices fell as the trading day progressed, underscoring a lack
of buying interest.
    Wall Street share succumbed to profit-taking after a strong
rally on Monday, with the S&P 500 index declining 0.4
percent ahead of the start of earnings season, which kicks off
with Alcoa later on Tuesday.
    In Japan, the peak of earnings will be later this month to
early August.
    "At the moment, there's no catalyst for buying Tokyo shares.
But the valuation is still cheap so if we have decent quarterly
earnings, we could see more buying," said Hiroshi Ono, head of
equity investment at Sumitomo Life.
    Market players say Japanese shares still look inexpensive,
trading at less than 15 times the earnings, compared to around
17 times in the United States.
    The broader Topix fell 0.8 percent to 1,269.77 while
the new JPX-Nikkei Index 400 shed 0.8 percent to
11,526.43.
    Insurance companies led the fall, falling 2.9
percent. T&D Holdings fell 3.7 percent while NKSJ
Holdings fell 3.4 percent. Tokio Marine Holdings
 fell 3.2 percent.
    Nippon Steal & Sumitomo Metal Corp fell 2.4
percent.
    Bucking the trend, Casio Computer rose 6.0 percent after the
company announced a plan to buy back 3.16 percent of its shares.

 (Editing by Kim Coghill)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.