TOKYO, Aug 23: Japan’s Nikkei average pared earlier losses to trade flat on Thursday as investors betted on stronger Chinese manufacturing data, helping offset pressure on exporters as yen firmed after the Fed signalled it is likely to launch more stimulus.
By the midday break, the Nikkei was steady at 9,130.55 after falling as much as 0.8 percent to 9,062.54. Gainers included industrial robot maker and benchmark heavyweight Fanuc Corp which reversed earlier losses to trade up 0.2 percent.
The broader Topix dipped 0.3 percent to 760.62.
Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo, said the Nikkei had tracked gains in China and Hong Kong before the release of the Chinese PMI data, which was released after the close of the Nikkei morning session.
But China’s factory activity in August shrank at its fastest pace in nine months as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter.
Exporters were down, however, after minutes from the U.S. Federal Reserve’s latest meeting suggested it is likely to launch another round of monetary stimulus ‘fairly soon’ unless the economy improves considerably.
The minutes weighed on the dollar, which fell as much as 1.3 percent to hit a one-week low against the yen at 78.273 on Wednesday. The dollar was last traded at 78.546 yen.
Toyota Motor Corp, Honda Motor Co and Nissan Motor Co were down between 0.9 and 2.2 percent.
Construction machinery makers Komatsu Ltd and Hitachi Construction Machinery Co Ltd fell, hurt by BHP Billiton’s announcement that it had shelved its planned $20 billion Olympic Dam expansion in Australia and put all other approvals on hold.
They later trimmed losses, to be down 0.9 and 0.1 percent respectively.
SHARP IN FOCUS
Other gainers included Sharp Corp, which advanced 3.3 percent after Japanese media said the embattled TV maker’s main creditors, Mizuho Corporate Bank and Mitsubishi UFJ Financial Group, are considering extending about 200 billion yen ($2.5 billion) in loans.
It was the most-traded stock on the main board by turnover.
Short selling in Sharp remained high, with 92.05 percent of its stock that is available to be borrowed out on loan as of Aug 21, down from a high of 92.21 percent on Aug 17, according to data provider Markit.
Trading volume on the Topix after Thursday’s morning session was light, at 41 percent of its full daily average for the past 90 days.
Yasuo Sakuma, portfolio manager at Bayview Asset Management, said he expected trading in Japanese equities would be volatile in September ahead of the Fed’s next meeting and fresh developments in Europe after policymakers return from holidays.
With this in mind, he has been gradually cutting his long positions, especially those in tech and raw materials sectors, and plans to continue to lift his cash levels.
‘Investors are relatively optimistic on the economy and expectations of stimulus from China and other markets but I can’t find any catalyst to bid up the prices beyond current levels,’ he said.
Mounting expectations that the European Central Bank will soon launch a bond-buying programme to bring down borrowing costs for highly-indebted countries like Spain and Italy have helped the Nikkei rebound 9 percent since it hit a seven-week low on July 25.
The benchmark touched a three-month high on Monday and is up 7.4 percent so far this year.
Foreign investors turned to net buyers of Japanese equities last week after seven weeks of net selling, capital flows data from Japan’s Ministry of Finance showed.
($1 = 79.2500 Japanese yen)
(agencies)
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