Nikkei slips after hitting 20,000 mark, profit-taking prevails

* Nikkei succumbs to profit-taking after hitting 20,000 mark * Market divided over whether 20,000 goal or mid-point in rally * Drugmakers, shipping lines fall * Retailers remain upbeat on economic outlook By Hideyuki Sano TOKYO, April 10 (Reuters) – Japan’s Nikkei share average slipped on Friday when the initial euphoria as it topped the psychological milestone of 20,000 was quickly taken over by selling to lock in the past few months’ solid gains.

The Nikkei fell 0.2 percent to 19,897.97, reversing its course after having risen above the 20,000 mark for the first time in 15 years.

“Market opinion is divided over whether the 20,000 mark is just one point in a rally or a goal. Up until now, both camps were buying but from now some investors will be selling,” said Masayuki Doshida, senior market analyst at Rakuten Securities.

The rally has been driven by many factors, including hopes of higher shareholder returns, rise in corporate earnings, recovery in domestic consumption and more share buying, both real and imagined, by Japanese public investors.

The market expects Japanese corporate earnings to rise 10 to 15 percent this year, but with the Nikkei already up 14 percent so far this year, some investors see limited justification to chase more gains.

Drugmakers, the best performer so far this year, were among leading decliners, falling 1.5 percent. Astellas Pharma fell 1.9 percent and Takeda Pharmaceutical dropped 0.6 percent.

Shipping lines dropped 2.1 percent, with Mitsui OSK Lines falling 2.9 percent and Kawasaki Kisen was down 2.8 percent.

Fast Retailing, the operator of Uniqlo casual clothing chain, rose 4.0 percent after it raised its guidance for the year ending in August.

Ryohin Keikaku shot up 14.3 percent after the operator of Muji stores forecast solid profit growth for the year to February.

The valuation of retailers and some other domestic demand-oriented shares, such as food companies, has become high by historical standards.

But some market players say these shares are not necessarily expensive given that the prospects that Japan is exiting more than a decade of deflation mean their revenues are likely to grow even without economic growth in real terms.

Hopes of an end to deflation and other structural changes such as a greater readiness among Japanese companies to boost shareholder returns keep some investors bullish on the overall market.

“Many investors have been sceptical about Abenomics last year. But it has finally started to dawn on many investors that Abenomics is about reforming the corporate sector,” said Hisashi Kuroda, general manager of equity at Meiji Yasuda Asset Management.

The broader Topix fell 0.4 percent to 1,587.30 while the JPX-Nikkei Index 400 shed 0.5 percent to 14,439.51.

(Editing by Eric Meijer)

Nikkei Futures

nikkeifutures.org@imediaone.com

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