February 13, 2013 / 7:40 AM / in 5 years

Nikkei pulls back as firmer yen prompts profit-taking; Gree tumbles

* Market remains sensitive to forex comments
    * Gree falls 15.3 pct on poor earnings, outlook cut
    * Pullback seen as limited - trader

    By Sophie Knight
    TOKYO, Feb 13 (Reuters) - Japan's Nikkei share average lost
ground on Wednesday as the yen jerked higher, triggering
profit-taking on exporters, while social gaming company Gree Inc
 suffered a steep fall after cutting its annual profit
    The Nikkei dropped 1 percent to 11,251.41. Its
decline widened in the afternoon as investors sold exporters on
a firmer yen after a Group of Seven official voiced concern
about excessive moves in the Japanese currency. 
    "The market will likely stay sensitive to officials'
comments until the G20 meeting this weekend. Any comments on
foreign exchange could move the market," said Takuya Takahashi,
an analyst at Daiwa Securities. 
    Major exporter Mazda Motor Corp, whose share price
nearly tripled between mid-November and early February as the
yen weakened, dropped 2.8 percent in heavy trade. Fellow
exporters Sony Corp and Toyota Motor Corp shed
5.6 and 1.8 percent respectively.  
    Securities firms, which had sharp gains on Tuesday, were
also sold off, although some analysts expect investors to buy
the sector again soon. 
    Nomura Holdings fell 3.2 percent after advancing
5.5 percent on Tuesday, when the Nikkei rose 1.9 percent to end
near a 33-month high of 11,498.42 hit on Feb. 6.
    "This last week and a half has definitely been more choppy,
but the market has been reaching higher," said a senior trader
at a foreign bank.
    "The air is getting a little thinner the higher we go up and
people are just a bit more nervous, but we haven't had a
pullback that's lasted more than a day or two," he added.
    The broader Topix dropped 1.2 percent to 966.52 as
volume dropped to its lowest in seven days, with 3.81 billion
shares changing hands. 
    Market watchers said the market may be prone to volatility
until the weekend, when Group of 20 finance chiefs meet in
    Investors may also be cautious ahead of a Bank of Japan
meeting concluding on Thursday, although there are few
expectations of any fresh policy easing until a new governor is
    Earnings continued to be a market driver on Wednesday, with
social gaming firm Gree suffering a 15.3 percent tumble after
slashing its profit outlook, citing a delay in the release of
some game titles and sluggish overseas earnings. 
    Gree came under additional pressure after Nomura Securities
downgraded it to "neutral" from "buy".
    Mitsubishi Materials Corp dropped 7.2 percent to
its lowest level in nearly three months after the metal company
cut its annual operating profit forecast by 13 percent due to
sluggish demand for car and battery materials. 
    Life insurers bucked the market after Goldman Sachs said the
recent stock market rally and risk asset reduction had improved
their valuations. It said Japanese insurers, badly hurt by the
euro crisis, now look inexpensive compared with their foreign
    Goldman Sachs selected Dai-ichi Life Insurance Co Ltd
 as its top pick, propelling the share up 3.5 percent to
approach the 23-month high it struck on Jan. 15. Goldman's
downgrade of NKSJ Holdings Inc, its least favoured
company in the sector, left the stock down 1.8 percent. 
    Many market players believe there is still upside for
Japanese equities, particularly if the yen resumes its slide.
    The dollar last traded at 93.02 yen, down from a near
33-month high of 94.41 yen on Tuesday, while the euro shed more
than one yen to as far as 125.03.
    Bank of America Merrill Lynch said in a note dated Tuesday
that the consensus among fund managers was for the next big
macro event to be the yen reaching 100 against the dollar. It
also said "contrarians" would likely be adding Japanese equities
to their portfolios when the market dips.
    In a separate note, Merrill said that a net 7 percent of
surveyed global investors are now overweight on Japanese
equities, with autos, technology and banks the most favoured
sectors. The report also said all of the investors now expect
double-digit increases in Japanese corporate earnings, compared
with 70 percent in January.
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