Nikkei soars on U.S. data, GPIF; Abenomics in focus after resignations

lunes 20 de octubre de 2014 01:23 GYT
 

* News GPIF raising stock allocation to 25 pct underpins
sentiment
    * Resignation of two cabinet members a big blow to Abe -
analyst

    By Ayai Tomisawa
    TOKYO, Oct 20 (Reuters) - Japan's Nikkei share average
surged 3.8 percent on Monday afternoon and was on track for its
biggest daily rise in more than a year as investors took heart
from upbeat U.S. data and as the weaker yen lifted exporters
such as Toyota Motor Corp and Honda Motor Co.
    Also underpinning the market was news that Japan's $1.2
trillion public pension fund will likely raise its allocation to
domestic stocks to about 25 percent from 12 percent at present.
 
    People familiar with the process told Reuters that a
weighting in the middle of the 20-30 percent range is the main
proposal for the coming reallocation and is under final
discussion within GPIF. 
    The Nikkei share average rose 551.64 points to
15,087.30 in early afternoon trade, recovering most of last
week's losses. 
    Upbeat U.S. consumer sentiment gave relief to investor
sentiment and lifted risk appetites. The Thomson
Reuters/University of Michigan index of consumer sentiment
unexpectedly rose in early October to its highest level since
July 2007. Separate data showed groundbreaking for new homes
rose more than expected last month. 
    Traders said investors were scooping up recently-battered
stocks after the Nikkei tumbled 5 percent last week on concerns
about faltering global growth and the stronger yen.
    "Selling in some of the stocks was overdone. Investors are
buying them on the dips," a trader at a Japanese brokerage said.
    But some analysts remained cautious, and said any rebound
may be short-lived.
    "With Halloween just around the corner, the market was
spooked by 'ghosts' and these ghosts will probably stick around
longer," said Hiroyuki Nakai, chief strategist at Tokai Tokyo
Research Center, citing persistent concerns about the sputtering
European economy, worries about what could happen after the U.S.
Federal ends tapering and the Ebola epidemic.
    Toyota jumped 5.4 percent, Honda soared 3.8 percent and
Panasonic Corp surged 4.7 percent after the dollar rose
0.2 percent at 107.18 yen, moving further from a
five-week low of 105.90 hit the previous week.
    NEC Corp rose 5.3 percent after the Nikkei business
daily reported its operating profit for the April-September
period was likely to be about 20 billion yen, compared to just
shy of 400 million yen in the previous year.
    
    POLITICAL WOES IN BACKGROUND
    While shares in the Japanese market soared mostly on the
external factors on Monday, a domestic political scandal could
have a negative impact in the mid-to-long term, analysts said.
    Japanese Prime Minister Shinzo Abe said on Monday afternoon
that he accepted Trade Minister Yuko Obuchi and Justice Minister
Midori Matsushima's resignations over questionable political
spending and alleged violation of the election law,
respectively.  
    "This is a serious blow to Abe's administration, maybe the
most serious one since his administration began two years ago,"
said Kyoya Okazawa, head of global equities at BNP Paribas.
    "The fact that two of his five female members resigned is
very bad and should hurt his support rate in the longer term as
boosting women in his cabinet and in the workforce was supposed
to be part of his growth strategy."
    Okazawa said that if Abe's approval rate falls, he will
likely have a difficult time pushing through measures to revive
the economy.
    The broader Topix jumped 4.1 percent to 1,224.98,
and the new JPX-Nikkei Index 400 gained 4.1 percent
to 11,152.92.

 (Editing by Kim Coghill and Richard Borsuk)