September 9, 2013 / 1:56 AM / 4 years ago

Nikkei hits 5-wk high on Olympics euphoria; strong GDP supports

4 Min Read

* Construction, real estate stocks surge on Olympics hopes
    * GDP data serves as a tailwind - analysts

    By Ayai Tomisawa
    TOKYO, Sept 9 (Reuters) - The euphoria of Tokyo winning the
2020 Olympics drove Japan's Nikkei share average to a five-week
high on Monday, led by stocks expected to benefit from the
event, with a sharp upward revision to second-quarter growth
further boosting sentiment.
    Taisei Corp, the contractor for the stadium built
for the 1964 Olympics, jumped as much as 17.4 percent to a 6-1/2
year high on expectations it will be involved in reconstructing
the facility for the 2020 Games.
    The Nikkei was up 2.7 percent at 14,238.42 in
mid-morning trade after earlier rising to 14,251.46, its highest
 since Aug. 6. 
    The market jumped past resistance at 14,174.71, the 50
percent retracement of the slide from a May peak to a June low.
    "The market is excited today, and it will last throughout
the day," said Nobuhiko Kuramochi, a strategist at Mizuho
Securities, adding that all types of investors were buyers. 
    Real estate and construction were the
best-performing sectors with respective gains of 5.1 percent and
4.6 percent. Mitsubishi Estate Co soared 4.7 percent
and Mitsui Fudosan Co gained 5.7 percent.
    
    OLYMPICS RALLY
    Shares of other contractors also outperformed, with Kajima
Corp, Obayashi Corp, Shimizu Corp and
Tobishima Corp up between 7.9 and 11.9 percent.
    Sportswear maker Mizuno Corp jumped 16 percent,
while sneaker maker Asics Corp surged 8.2 percent.
    The economic impact of the Olympics win was estimated by the
Tokyo bid committee at more than 3 trillion yen ($30 billion)
with the creation of 150,000 jobs. 
    The broader Topix index added 2.2 percent to
1,172.73 in relatively active trade, with volume already at 43
percent of its daily average for the past 90 days.
    But some analysts cautioned the celebratory mood could spark
irrational expectations about benefits from the Olympic Games.
    "The Olympics euphoria should be short-lived. Such
indiscriminate buying will end shortly," said Norihiro Fujito,
senior investment strategist at Mitsubishi UFJ Morgan Stanley
Securities.
    "Everyone is buying everything now, but the market will soon
become rational and take a close look at which companies will
actually benefit from the Olympics."
    
    
    GDP BOOST
    Monday's strong GDP revisions served as a tailwind for the
stock market. Annualised growth in the second quarter was
revised up to 3.8 percent from a preliminary 2.6 percent, 
heightening the case for Prime Minister Shinzo Abe to proceed
with a planned sales tax hike next year. 
    "Foreign investors won't buy into Japanese equities further
because the government will proceed with a planned sales tax
hike, but will sell if it scraps the plan. So in that sense, the
outcome was positive," said Shun Maruyama, chief Japan equity
strategist at BNP Paribas.
    He expected the Nikkei would likely rise to 15,000 - a level
not seen since May - in early October when the decision on
whether to raise the tax as planned will be announced.

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