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Nikkei posts highest close in a month; revised GDP

Written by: Staff

Tokyo, Mar 13: The Nikkei share average rose 1.53 per cent on Monday to record its highest close in a month, as revised economic growth data underscored an upbeat outlook for Japan, pushing up a wide range of sectors.

Property shares gained ahead of the government's land price data due next week, while auto stocks rose as the dollar stayed in sight of a one-month high against the yen after healthy U.S. payrolls data last week.

Revised gross domestic product (GDP) data released on Monday showed that the world's second-largest economy grew 1.3 per cent in real, price-adjusted terms in the final three months of last year. That was down from an initial reading of 1.4 per cent but above the latest consensus forecast of 1.2 per cent.

''The downward revisions were not as bad as expected,'' said Yumi Nishimura, a manager in the investment advisory section at Daiwa Securities SMBC Co. Ltd. ''Some good data was seen as housing rose, beating the market's bearish outlook.'' Analysts said the Bank of Japan's ending of its ultra-easy monetary policy last week also continued to support the market.

The Nikkei rose 245.88 points to 16,361.51, its highest close since Feb. 9. Earlier in the session, it touched an intraday high of 16379.47. The benchmark index rose for the third straight session and has added more than 700 points since Thursday, the day when the Bank of Japan announced an end to its five-year-old super-easy monetary policy.

The broader TOPIX index was up 1.66 per cent at 1,674.66.

The GDP numbers also showed a growing contribution from exports, pushing up exporters such as auto and technology stocks.

Advantest Corp., a semiconductor testing equipment maker that posts about two-thirds of its sales abroad, rose 3.2 per cent to 13,910 yen.

Toshiba Corp added 3.2 per cent to 654 yen after a report the electronics maker plans to build another flash memory factory in Japan to better compete with Samsung Electronics Co. Ltd. Toshiba said nothing has been decided on a new plant.

The strong dollar helped exporters, especially auto stocks.

The greenback was around 118.80 yen in sight of the one-month high of 119.15 yen hit on Friday.

Toyota Motor Corp. was up 0.8 per cent at 6,340 yen and Nissan Motor Co. Ltd. gained 1.3 per cent to 1,376 yen.

Fuji Heavy Industries Ltd. jumped 6.5 per cent to 673 yen ahead of its joint announcement with Toyota Motor due at 9 p.m.

(1200 GMT/1730 IST) on a business alliance.

Business daily Nihon Keizai said on Saturday the two companies have agreed to co-develop a gasoline-electric hybrid system for Fuji Heavy's Subaru cars.

Property stocks lured buyers, with Japan's largest developer Mitsui Fudosan Co. Ltd. gaining 1.7 per cent to 2,640 yen and No.2 Mitsubishi Estate Co. Ltd. adding 1.6 per cent to 2,585 yen.

Expectations of rises in land prices also benefitted East Japan Railway Co., which climbed 4.1 per cent to its all-time high of 872,000 yen.

The company, which owns property such as station buildings, is also being bought as investors focus on its property assets.

Strong Outlook

Stock buyers were also encouraged by a Goldman Sachs report that forecast recurring profit growth for Japanese companies of 16 per cent in the year starting on April 1.

That estimate was bullish compared with Nomura Securities' estimate of 8.2 per cent expansion and Daiwa Institute of Research's 8.4 per cent forecast increase. The market consensus for earnings also points to single-digit earnings growth.

''We believe the consensus is exaggerating the impact of higher interest rates ... At the same time, we believe the consensus underestimates the potential for stronger top-line growth,'' Goldman Sachs said in a report released late on Friday.

Tsutomu Yamada, a market analyst at Kabu.com Securities Co., said bank stocks are likely to draw buyers in the phase of credit tightening.

''Even under the super-easy monetary policy, some banks are generating huge profits. So if interest rates start to go up, you would wonder how much profit they could make,'' he said.

Naoyuki Torii, a general manager and strategist at Fukoku Capital Management Inc., also said he was focusing on small-cap stocks.

''History shows that small- and medium-capitalisation stocks tend to perform well when interest rates are rising,'' he said.

Meanwhile, eAccess Ltd., one of three firms to be awarded mobile licences by the Japanese government last autumn, said it has picked Sweden's Ericsson as the main supplier for its next-generation mobile phone network.

eAccess ended up 1.6 per cent at 85,400 yen.

Trade activity fell sharply from the previous session, with 1.61 billion shares changing hands on the Tokyo exchange's first section, well below last year's daily average of 2.07 billion shares. Advancing issues outnumbered fallers by more than eight to one.


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