Monday November 17, 07:00 AM
Nikkei gains despite GDP, pension fund buying buoys
By Elaine Lies
TOKYO, Nov 17 (Reuters) - Japan's Nikkei (news) average gained 0.7
percent on Monday despite data showing the world's
second-largest economy has slipped into
recession, with buying
by public pension funds seen as likely to have boosted shares
across the board.
A weaker yen helped exporters such as Canon Inc (Berlin: CNN1.BE - news)
gain, while Honda Motor Co (Stuttgart: 853226 - news) rose after business weekly
Barron's said it would be a big winner once the financial market
turmoil subsides.
Takeda Pharmaceutical Co (Berlin: TKD.BE - news) and other defensive shares
seen as resilient in the face of global economic turmoil were
strong performers, but major real estate firms plunged after a
survey showed rent charges for new office buildings in Tokyo had
declined for the first time in six years.
'There really aren't any good reasons for the market to rise
right now, making pension funds seem like the most likely
buyers,' said Koichi Ogawa, chief portfolio manager at Daiwa SB
Investments.
'After all, there are still a lot of problems out there that
have yet to be solved.'
Other market players said that funds appeared to be buying
to bring their stock allotments up to required levels, taking
advantage of current bargain prices to do so.
'Foreign investors, such as hedge funds, have stopped
selling, and that combined with the thin volume and apparent
pension fund buying helped push the Nikkei higher,' said
Masayoshi Okamoto, head of trading at Jujiya Securities.
Though at one point early in afternoon trade the benchmark
Nikkei climbed more than 3 percent, by the close it had
shed most of its gains as the dollar slipped against the yen,
ending up 60.19 points at 8,522.58.
The broader Topix rose 0.4 percent to 850.49.
The market was volatile in relatively light trade, with the
Nikkei losing close to 3 percent at one point in the morning
after data showed Japan's economy shrank 0.1 percent in the
third quarter, lagging market expectations for anaemic growth of
0.1 percent.
On the Tokyo exchange's first section, 2.03 billion shares
changed hands, compared with last week's daily average of 2.11
billion.
The contraction confirmed that the global financial crisis
has sabotaged growth in yet another major economy, with the euro
zone already in recession, using the most common definition of
two consecutive quarters of contraction.
But market players said the GDP was old data that the market
mostly shrugged off after the initial response.
'It wasn't a surprise, and people are expecting poor figures
for the next quarter as well, but that's largely factored in
already,' said Daiwa SB Investment's Ogawa.
Others, though, said the next quarter's GDP remained a
worry.
'We have no factors to expect the GDP figures will be
revised up later as a deterioration in U.S. consumer spending is
happening really fast, and a resulting firmer yen could further
damage Japan's economic outlook,' said Takahiko Murai, general
manager of equities at Nozomi Securities.
FINANCIAL SUMMIT NOT A FACTOR
Governments from Washington to Beijing agreed Saturday to a
host of fiscal and monetary steps to rescue the global economy
but it was left to individual governments to tailor their
response to their particular circumstances and troubled
industries, underwhelming markets.
'Basically, it was nice that a lot of important people
gathered together and set a direction, but nothing concrete
emerged,' said Ogawa.
The yen and U.S. dollar rose in a flight to safety on the
view that the meeting yielded no concrete moves to avert a
global recession, and exporters rose as the dollar climbed back
above 97 yen after sliding as slow as 95.87 yen.
Honda's shares rose 1.6 percent to 2,145 yen, with Barron's
noting in its long-term favour the fact that it's a leader in
making small, fuel-efficient vehicles and that it sells more
than just cars and is branching out into new products and
markets.
But the standout gainers were defensive shares, with Takeda
Pharmaceutical rising 2.8 percent to 4,820 yen and fellow
drugmaker Eisai Co (Frankfurt: 855526 - news) gaining 3.3 percent to 3,400 yen.
Daiichi Sankyo Co (Stuttgart: A0F57T - news) climbed 5.4 percent to 1,964 yen.
A survey by the Nikkei business daily on office rents showed
that building owners were lowering rents because tenants have
become less willing to expand or move to new offices amid the
economic slump.
Major real estate firms plunged. Japan's top property
company Mitsui Fudosan Co (Frankfurt: 858019 - news) slid 5.2 percent to 1,383
yen and Mitsubishi Estate Co (Berlin: MES.BE - news) falling 5.4 percent to
1,396 yen. Sumitomo Realty & Development Co Ltd
declined 2.7 percent to 1,276 yen.
Advancing stocks outpaced declining ones, 886 to 720.
(Additional reporting by Aiko Hayashi)
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