July 7, 2014 / 2:15 AM / in 3 years

RPT--Nikkei flat near 5-1/2-month high, helped by pension buying hopes

* Nikkei rises 0.1 pct, Topix flat
    * Expectations of domestic pension funds' buying support
    * Hydrogen fuelling stations-related shares jump

    By Tomo Uetake
    TOKYO, July 7 (Reuters) - Japanese shares were little
changed near 5-1/2-month highs on Monday but underpinned by
expectations of domestic pension funds' buying, which has been a
major driving force behind the market's rally in the last two
    The benchmark Nikkei average gained 0.1 percent to
15,445.68 points, after rising as high as 15,477.77, not far
from Friday's high of 15,490.37.
    Many market players expect the $1.24 trillion Government
Pension Investment Fund (GPIF) to buy more shares as Prime
Minister Shinzo Abe has been pressing the enormous fund to seek
higher returns for Japan's rapidly ageing population by pumping
more money into stocks.
    "The government cannot allow share prices to fall. So it is
not a phase to sell shares and there will be buying by public
players on dips," said Kyoya Okazawa, the head of global equity
and commodity derivatives at BNP Paribas.
    The GPIF said on Friday that it had 15.88 percent in
Japanese equities at the end of March, higher than 14.05 percent
a year ago, but still below a level of around 20 percent which
many investors see as its future target. 
    Buying by three, smaller "semi-public" pension funds has
been considered as a major driving force behind the market's
rise in the past two months. 
    Tokyo shares were also helped by optimism on the U.S. and
global economy, and as Wall Street shares trade at all-time
    U.S. markets were closed on Friday for the Independence Day
holiday. U.S. jobs numbers for June, which were released on
Thursday, smashed forecasts and raised expectations that the
world's biggest economy was on a stronger recovery path.
    Trading was slower than usual due to the U.S. market
holiday, leaving Japanese retail traders as the main players.
    They jumped on to hydrogen-related shares after Toyota
 announced last month that it will launch hydrogen fuel
cell vehicles next March.
    Mitsubishi Kakoki Kaisha, a company with market
capitalisation of a mere $350 million, had bigger turnover than
Toyota, becoming the third-heaviest traded stock by turnover.
    Its shares rose as much as 16 percent, and have gained a
whopping 156 percent in less than two weeks. The company builds
hydrogen fueling stations.
    Convenience store operator Familymart was the top
performer on the main board, rising 4 percent after trading
house Itochu Corp announced it was buying 5.35 percent
of Familymart shares to strengthen business ties between the two
    Itochu was down 1.3 percent.
    Kyushu Electric Power Co Inc jumped as much as 3.6
percent to hit a four-month high following media reports that
the company was expected to pass a milestone in its journey to
restart two reactors at the Sendai nuclear plant idled in the
wake of the Fukushima nuclear disaster.
    On the other hand, retailer Aeon fell 4.3 percent
after it posted weak earnings on Friday. Its March-May operating
profit fell 35 percent from a year earlier.
    The broader Topix was little changed at 1,284.76,
while the JPX-Nikkei Index 400 shed 0.1 percent to

 (Editing by Eric Meijer & Kim Coghill)

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