June 30, 2014 / 2:20 AM / 3 years ago

Nikkei stabilises after selloff, capped by sales tax concerns

* Nikkei sags 0.1 pct, still set for strong end to June and
    * MVNO-related plays soar
    * Markets eye on Tankan, retailer earnings, U.S. jobs data

    By Tomo Uetake
    TOKYO, June 30 (Reuters) - Japan's Nikkei share average was
little changed on Monday morning as concerns over possible
slowdown in consumption after a tax hike in April limited
investors' appetite.
    The benchmark Nikkei eased 0.1 percent to 15,083.84,
stabilising after sliding 1.4 percent, its biggest one-day drop
in six weeks, in the previous session. 
    "The data out for the current quarter are suggesting
actually there has been a significant slowdown in consumer
spending after the consumption tax hike," said Stefan Worrall,
director of equity cash sales at Credit Suisse in Tokyo.
    "Friday's selloff was caused by some concerns about macro
(economy) and those concerns are likely to continue to be a
focus this week, particularly with retail sector earnings
beginning to come out."
    One example was clothing store chain Shimamura,
which fell 1.8 percent after the retailer said on Friday its
profits tumbled in the three months to May 20, as the company
did not pass on higher sales tax to consumers. 
    Retailers, including Seven & i Holdings, Aeon Mall
 and Ryohin Keikaku are scheduled to announce 
March-May earnings this week, which will provide investors an 
early indication on the impact of the sales tax hike.
    Traders were also wary of the possibility that buying by
public pension funds, a major driving force behind the market's
rally in the last two months, may run out of steam.
    Reuters reported last week that three Japanese "semi-public"
pension funds aggressively bought Tokyo stocks in recent weeks.
    "We suspect that public funds are responsible for the lion's
share of recent strong buying by trust banks," said Masatoshi
Kikuchi, pan-Asia chief equity strategist at Mizuho Securities,
referring to heavy buying by trust banks, which manage a large
proportion of public pension funds, since May.
    Such concerns kept main investors on the sidelines,
preventing Japanese shares from gaining on rises in Wall Street
shares on Friday.
    Shares in mobile virtual network operators (MVNOs) were
among the most-traded on the news that the government is set to 
require Japanese mobile phone carriers to remove
carrier-specific restrictions, or SIM locks, on handsets next
    Japan Communications surged 18.5 percent to the
day's limit, while Freebit climbed 21.9 percent and
Wireless Gate gained 13.3 percent.
    Non-bank financials were among the top
performers, rising 0.6 percent and extending their solid gains
this quarter on expectations of deregulation on the limit they
can charge borrowers.    
    Aiful jumped 8.8 percent, making it the most-traded
stocks on the Tokyo Stock Exchange's main board. 
    The broader Topix fell 0.1 percent to 1,251.97,
while the JPX-Nikkei Index 400 shed 0.1 percent to
    On the quarter, Japanese shares look to set to post small
gains after a sharp fall in January-March. The Nikkei was up 1.7
percent so far this quarter.
    The market was little affected by Japan's industrial
production reading for May, announced just before the opening
bell, as the modest rebound from a slowdown after an April sales
tax hike came as no big surprise. [ID: nL4N0P81NP]

 (Editing by Eric Meijer)

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