Nikkei hits 15-year highs as financials, large-cap shares attract bids
* Foreign investors said buying financial, large-cap shares * Next target for Nikkei seen at April 2000 peak around 20,830 * Nomura up 4.1 pct, SMFG gains 4.0 pct By Hideyuki Sano TOKYO, April 22 (Reuters) - Japanese shares rose to fresh 15-year highs on Wednesday as foreign investors snatched up financials and other large cap shares, believing them to be undervalued. The Nikkei share average rose 1.1 percent to 20,130.75 points by late morning, its highest level since April 2000. The next target is seen at its peak of 20,833.21 hit in that month, at the height of global dot com bubble. "The market looks very strong at the moment, with large-cap financial shares leading the gains. It appears foreign investors' money keeps coming to the market," said trader at a Japanese brokerage. Financial brokerage shares were the top performer among the Tokyo Stock Exchange's 33 industry subindexes, gaining 3.7 percent. Nomura Holdings rose 4.1 percent while Daiwa Securities Group gained 3.9 percent. They were followed by banking, other financial shares and insurers, which all rose more than two percent. Mitsubishi UFJ Financial Group rose 3.6 percent while SMFG jumped 4.0 percent. Among non-banks, Orix rose 4.3 percent. Market players say financial shares look relatively cheap, compared to recent gainers such as drugmakers and food companies. Many financial shares still trade at 10 to 15 times earnings, whereas price-to-earning ratios for defensive shares have shot up to 30 or above. In addition to banks, large cap shares outperformed the broader market, leading many traders to think that foreign investors who had underweighted Japanese stocks were now bringing their portfolios to more neutral levels. The Topix core 30 rose 1.5 percent while the broader Topix rose 1.0 percent, both hitting a 7 1/2-year high. Japan Tobacco, the sixth largest firm by market cap, rose 3.3 percent to hit a record high. Japanese share prices have been supported by many factors ranging from hopes of a recovery in domestic consumption, higher shareholder returns and continued buying by domestic public investors such as pension funds and the central bank. "There aren't any reasons to sell stocks on domestic front. Nevertheless, if the U.S. economic outlook worsens, the market cannot be immune," said Tsuyoshi Shimizu, chief strategist at Mizuho Asset Management. Elsewhere, shares in Kyushu Electric Power Co rose 2.8 percent after a Japanese court rejected a lawsuit to halt the restart of its Sendai nuclear station. The JPX-Nikkei Index 400 rose 1.0 percent to 14,737.91. (Editing by Kim Coghill)
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