TOKYO, May 13: Japan’s Nikkei share average surged to a fresh 5-1/2-year high on Monday as the weakening yen further bolstered exporters, while brokerage shares attracted buyers as growing volume was expected to bring in more fee income.
Strength in Wall Street on Friday also spurred buying after some upbeat earnings buoyed investor sentiment.
The Nikkei rose 1.6 percent to 14,833.30 by the midday break after climbing as high as 14,847.20, the highest level since January 2008.
The index has added nearly 43 percent this year, helped by Prime Minister Shinzo Abe’s growth policies and the Bank Of Japan’s aggressive monetary easing.
‘There is increasing demand for Japanese exporters from foreign investors,’ said Kyoya Okazawa, head of global equities at BNP Paribas in Tokyo.
The earnings season is in full swing. Market participants say some exporters are reporting overly conservative forecasts for the current year through March, and many investors expect these companies to raise their earnings guidance this fiscal year.
‘Conservative guidance is the same old Japanese managerial judgment. The market doesn’t mind conservative forecasts as they are pretty sure that the companies will revise up the already-announced figures,’ Okazawa said.
He added that the Nikkei will probably reach 15,000 as soon as this week, helped by gains in exporters as such automakers and electronics
Exporters soared on Monday, with Nissan Motor Co jumping 5.5 percent, Toyota Motor Corp adding 4.1 percent and Sony Corp gaining 4.9 percent.
The securities subsector, which soared 9.0 percent, was the best sectoral performer on hopes of an increase in commission fees from the booming market. Nomura Holdings jumped 11 percent while Daiwa Securities surged 8.7 percent.
The Topix gained 2.0 percent to 1,234.72.
The yen last traded at 101.86 against the dollar.
The likes of Panasonic Corp, Toyota Motor Corp and Sony Corp based their foreign exchange assumptions at 90 yen to 95 yen to the dollar.
Among 1,394 companies reporting their full-year earnings, they based their dollar-yen assumptions at an average 92 yen and forecast an average of 21 percent growth in their operating profits for the year through March 2014, said Tomochika Kitaoka, strategist at Mizuho Securities.
‘But if the dollar-yen assumption is raised to 100 yen, a gap between companies’ estimates and analysts’ figures will be filled…Their operating profits are expected to rise about 28 percent on year,’ Kitaoka said.
The weakening yen enables Japanese exporters to earn more from foreign currency profits.
Panasonic Corp soared 9 percent after the company said its operating profit will rise 55.3 percent in the year to March as it steps back from struggling operations in TVs and other consumer products.
Analysts said the market should stay upbeat after Japan avoided criticism about recent weakness in the yen at a meeting of Group of Seven finance officials on Saturday.
‘If international peers criticise the yen’s weakness, investors who are on the nervous side could stop chasing the market higher. Now, such concerns are receding,’ said Kenichi Hirano, a strategist at Tachibana Securities.
(agencies)
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