Nikkei hits 15-year high, retail fund flows support (April 8)

(Corrects spelling of name in Wednesday Nikkei report to Worrall, not Worral, in paragraph 3) * Individual investors buying underpins market * Retailers jump, Takashimaya gains after earnings * Market benefits from fund reallocation from Wall St By Hideyuki Sano TOKYO, April 8 (Reuters) – Tokyo’s benchmark index hit a 15-year high on Wednesday after Japanese retail investors ploughed a sizable amount of cash into new stock mutual funds and as regional bourses appeared to benefit from rotation of funds out of U.S. equities.

Retailers and other domestic-demand oriented shares led the gains, with department store operator Takashimaya erasing earlier losses to gain sharply despite reporting modest earnings.

“There are signs that Japan’s market is decoupling aggressively from US markets. Despite some choppiness emerging in US, the market is reflecting positive domestic factors such as earning expectations and inbound tourism,” said Stefan Worrall, director of equity sales at Credit Suisse.

The Nikkei rose 0.8 percent to 19,789.81, closing at its highest level since April 2000, even as Wall Street shares posted small losses the previous day.

The Nikkei has gained 3.0 percent so far this month, helped by the launch of two new equity investment trusts this week, which drew about 160 billion yen ($ 1.3 billion) from investors in total.

Signs of strong appetite from Japanese individual investors were seen as positive in a market which had been largely driven in recent months by public institutional investors, such as government pension funds.

Market players also noted that some investors could be shifting funds to Japan and other Asian markets from U.S. shares, which have been curbed by concerns on possible policy tightening by the Federal Reserve and a strong dollar.

“Japanese shares still look relatively attractive. Some exporters still keep conservative assumption on the exchange rate, and there aren’t any investors who have excessive long position in the market,” said Tetsuro Ii, the president of Commons Asset Management.

The Bank of Japan kept the pace of its monetary expansion unchanged on Wednesday as expected, but a small number of investors are speculating the central bank might step up its asset purchases soon as Japan’s core consumer inflation is slowing.

Domestic demand oriented shares remained well-bid, with retailers rising 1.7 percent as some of them benefit from a rising number of tourists from China and other Asian courtiers.

Takashimaya rose 4.0 percent even though its earnings were mostly in line with analyst expectations. Takashimaya has risen over 30 percent so far this year.

Rival Isetan Mitsukoshi rose 3.1 percent, extending its year-to-date gains to 44.8 percent, the fourth best performance among the Nikkei constituents, The broader Topix rose 0.6 percent to 1,588.47 while the JPX-Nikkei Index 400 gained 0.7 percent to 14,448.52.

($ 1 = 120.1700 yen) (Editing by Shri Navaratnam)

Nikkei Futures

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