(Corrects trading volume amounts in penultimate paragraph)
* Nikkei, Topix both rise 0.9 pct in active trade
* Exporters in demand as yen hits 20-month low vs dollar
* Short-term technical chart shows rally may last - analyst
* Power companies surge on nuclear-friendly LDP win
* Realtors, banks up on expectations of reflationary policy
By Ayai Tomisawa
TOKYO, Dec 17 Japan's Nikkei average climbed to
an 8-1/2-month high on Monday and a technical chart showed the
rally may last, as the yen weakened after the conservative
Liberal Democratic Party won a landslide election, calling for
aggressive monetary easing.
The Nikkei rose 0.9 percent to 9,828.88, the
highest closing level since April 3, while the yen hit a
20-month low of 84.48 yen to the dollar, boosting the appeal of
exporters' shares. A weaker yen helps boost Japanese exporters'
overseas earnings when repatriated and increases their
Exporters finding higher ground included Nissan Motor Co
, Sony Corp, Daikin Industries Ltd and
industrial robot maker Fanuc Corp, up between 1.4 and
The landslide victory gives the LDP and its ally, the New
Komeito party, a two-thirds majority needed to overrule
parliament's upper house in most matters, allowing the new
government a freer hand to implement its policy.
Analysts said that the LDP's victory was priced in to the
market, but the market cheered a 'super majority,' which gives
next Prime Minister Shinzo Abe more clout to pressure the Bank
of Japan to implement an aggressive monetary policy.
"A lot of investors were preparing to take profits from
recent gains, and they may still be looking for the timing as
their positions on yen selling and stock buying have
accumulated," said Nobuhiko Kuramochi, a strategist at Mizuho
"But now that the yen is weakening, they will hesitate to
take a risk of being left behind, so they don't want to reduce
their positions too much."
The benchmark Nikkei has risen 13.48 percent over the past
month, spurred by yen weakness after Abe called for the BOJ to
undertake "unlimited easing" and set an inflation target of 2
percent as well as big spending on public works to kick-start
the ailing economy.
The rally has taken the year-to-date gain for the Nikkei to
16.25 percent, ahead of a 12.4 percent rise in the U.S. S&P 500
and a 14.3 percent gain in the pan-European STOXX Europe
Monday's gain took the index further into "overbought"
territory, with its 14-day relative strength index at 78.34, way
above the 70-level which is deemed as overbought and often
signals a possible near-term pull back.
But analysts said that there are signs that the rally may
last for the mid-term. The toraku ratio, or up-down ratio, used
for the first section of the Tokyo Stock Exchange, was at 140.4.
The ratio is calculated by dividing the 25-day moving average of
stocks that gained by the 25-day average of those that fell. A
level above 120 signals an overheated market.
"If the toraku ratio is somewhere between 120 and 140, it
usually indicates a near-term pull-back. But if it's over 140
and nearing 150, it signals that the energy is too strong that
it can take the market even higher," said Hikaru Sato, a senior
technical analyst at Daiwa Securities.
The toraku ratio pierced the 140-line for the first time
since February 27, when the ratio started rising, which helped
the Nikkei rise by 6.5 percent over the next month.
"If the ratio stays above the 140-level for the next two or
three days, a rally lasting a month or s o will be more
promising," Sato said.
Power utilities surged in reaction to the LDP win, noting
the party opposes a nuclear-free policy. Tokyo Electric Power Co
, whose shares have been battered by the meltdown at its
Fukushima nuclear plant after last year's earthquake, jumped
32.9 percent and Kansai Electric Power Co rallying 17.7
percent. Tokyo Electric Power was the sixth-most traded stock on
the main board by turnover.
Shares of financial and property firms, which tend to
benefit the most in a reflationary situation, also gained.
The real estate sector gained 2.3 percent, while
Nomura Holdings Inc, Japan's top brokerage, rose 3.0
percent and lender Mitsubishi UFJ Financial Group added
1.8 percent and was the second-most traded stock.
Nomura Securities highlighted 10 stocks that would likely
outperform under an LDP administration, including Sumitomo Osaka
Cement Co Ltd, Taiheiyo Cement Corp,
contractors Obayashi Corp and Kajima Corp,
real estate firm Mitsui Fudosan Co Ltd, home builder
Sekisui House Ltd and Mazda Motor Corp.
"We estimate that global funds are still about 2 percentage
point underweight Japanese equities. Given the election results,
we see a high probability of foreign investors becoming
substantial net purchasers of Japanese equities to reduce their
risk of underexposure to Japan," it said in a note.
"We now see a possibility of the equity market surpassing
our end-March 2013 Nikkei average target of 10,250."
The broader Topix index advanced 0.9 percent to
807.84 in active trade, with 2.8 5 billion shares changing hands
on the main board, compared with last week's average daily
volume of 2.29 billion sha res.
Struggling TV maker Sharp Corp, the most-traded
stock by turnover, surged 1 1.9 p ercent to extend this month's
rally to 75 percent on short-covering after it said in early
December that U.S. chipmaker Qualcomm Inc would invest
$120 million. But the stock is still down 55 percent
(Editing by Sanjeev Miglani)