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Nikkei sees highest levels in 15 years

Thursday, January 31 07:38:41

Japan's Nikkei share average edged up today, posting its best January in 15 years as gains in the banking sector lifted sentiment, offsetting gloomy earnings from such bellwether companies like Nintendo Co.

The Nikkei ended up 0.2 percent at a new 33-month high of 11,138.66 points and posted a 7.2 percent gain this month, its strongest January performance since 1998 after rallying 22.9 percent in 2012.

Analysts said that global cyclical companies such as exporters may continue to disappoint the market with gloomy earnings for the Oct-Dec period. They also said they do not have overly high expectations most exporters would immediately gain from the recently weak yen and raise their full-year forecasts. In the meantime, stocks that could benefit from Japan Prime Minister Shinzo Abe's reflationary policies will likely be in demand, analysts added.

"Domestic-sensitive shares are playing catch-up with exporters which have enjoyed sharp gains," said Kyoya Okazawa, head of global equities at BNP Paribas. "When investors are hopeful that the rally will be a long term one, their focus will shift to domestic-sensitive shares from global cyclical stocks."

Banks were notable gainers on Thursday, with Sumitomo Mitsui Financial Group climbing 5.2 percent after its ninth-month earnings handily beat its operating profit forecast for the full-year ending March.

"Securities and banking stocks lent support to Topix. SMFG's positive earnings results have encouraged investors to buy banking stocks. Expectation for earnings of major brokerages, such as Nomura and Daiwa, are also high," said Masayuki Otani, chief market analyst at Securities Japan.

Rivals Mitsubishi UFJ Financial Group and Mizuho Financial Group rose 3.6 percent and 2.8 percent, respectively. ( C) Reuters