Nikkei falls on profit-taking; Topix gains on defensive share buying

Japan’s Nikkei share average fell on Friday, retreating from a 7-1/2 year closing high as investors took profits from the previous day’s gainers such as Fanuc Corp, but buying in cyclical stocks exposed to consumer demand limited the losses.

Fanuc, which rose 6.2 per cent on Thursday on media reports saying that Third Point bought a stake in the company, fell 1.3 per cent on profit-taking and lopped a hefty 11 points off the Nikkei.

By late morning, the Nikkei was down 0.2 per cent at 17,952.72, after the benchmark closed at 17,979.72 on Thursday, the highest closing level since July 2007.

For the week, the Nikkei has gained 1.5 per cent.

However, the broader Topix outperformed, rising 0.2 per cent to 1,451.82, with 19 of its 33 sub-sectors in positive territory.

Financial stocks and real estate stocks led the gains on the Topix, with the securities sector rising 1.1 per cent, the other financial sector gaining 2.3 per cent and the real estate sector adding 1.8 per cent.

Nomura Holdings rose 1.1 per cent, Mitsui Fudosan gained 1.9 per cent and Aiful Corp added 5.2 per cent.

The securities sector has dropped 3.6 per cent since the beginning of the year, while the other financial sector is up 1.8 per cent and the real estate sector has added 0.5 per cent. The Nikkei is up 2.7 per cent during the same period.

“Shares that have underperformed the overall market are being bought, especially domestic-demand sensitive shares,’’ said Kyoya Okazawa, head of global equities & commodity derivatives at BNP Paribas.

Okazawa, who recently visited foreign investors, said that global macro funds had reduced risky assets, including Japanese stocks, after the Swiss National Bank surprised the market by deciding to end the cap on the franc in January.

But he said that global macro funds are expected to start revisiting Japanese shares as they started focusing on how weak oil prices will benefit the Japanese economy and related sectors such as retail.

“Stronger consumption in the domestic market will be a key.’’

Meanwhile, a ceasefire agreement between Russia and Ukraine eased tensions in the market.

Exporters were mixed after the dollar traded at 119.04 yen, knocked down from a five-week high of 120.48 touched on Wednesday.

Toyota Motor Corp dropped 0.5 per cent, while Honda Motor Co gained 0.2 per cent. Bucking the weakness, Japan Display soared as much as 7.7 per cent to a four-month high on strong profits.

The JPX-Nikkei Index 400 rose 0.1 per cent to 13,147.36.

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