TOKYO, Apr 23: Japan’s Nikkei average eased on Tuesday, hurt by weak Chinese manufacturing data, while investors also locked in some of the recent gains after the yen’s slide towards 100 to the dollar paused.
However, the underlying mood remained positive on bold efforts by the government and central bank to revive the economy, helping support the Nikkei, which fell 0.3 percent to 13,530.01 by the midday break.
‘Uncertainties over the global economy are making investors reluctant to chase the stocks higher for now,’ said Shun Maruyama, chief Japan equity strategist at BNP Paribas Securities, referring to weak economic data overseas.
‘Many of them are kind of waiting for the fog to clear.’
The Nikkei China 50 index, which comprises of companies with significant exposure to the world’s second-largest economy, dropped 0.5 percent after growth in China’s vast factory sector dipped in April as new export orders shrank.
The PMI release adds to the recent run of soft data from China and the United States, suggesting the global economic recovery may have stalled.
The Nikkei ended at its highest closing level since July 2008 on Monday after the Group of 20 leading economies stopped short of criticising Tokyo’s sweeping expansionary monetary policies.
But the yen failed to push to 100 to the dollar after hitting a low of 99.89 on Monday. The Japanese currency was last traded at 98.935 to the greenback.
Equity investors took that as a cue to lock in some profits, with Daikin Industries, Toshiba Corp and Ricoh Ltd down between 1.9 and 2.1 percent.
Investors also pocketed gains in shares of financial and real estate companies, which are expected to benefit the most from the Japan’s reflationary policy, after their recent sharp rally.
‘Today we see another round of profit-taking in real estate and J-REIT (real estate investment trust),’ said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
‘Both institutional and retail investors are waiting for weakness to increase their positions.’
The real estate sub-index lost 2 percent on Tuesday morning and was the worst performing sector on the main board.
Yet, it is still up 106 percent since mid-November, when Shinzo Abe, who became Prime Minister in December, promised bold monetary and fiscal expansionary policies during his election campaign. The benchmark Nikkei has rallied 56 percent during the same period.
The Bank of Japan’s massive stimulus programme announced earlier this month, with a commitment to inject $1.4 trillion into the economy in less than two years to reignite growth, has provided fresh momentum to Nikkei bulls.
The banking sector shed 1 percent, with Mizuho Financial Group Inc down 1.4 percent.
The broader Topix index inched down 0.2 percent to 1,143.05 by the midday break, with volume at 70 percent of its full daily average for the past 90 trading days.
Bucking the weakness on Tuesday, Oki Electric Industry Co Ltd surged 18.6 percent after the Nikkei newspaper said the telecommunication equipment maker’s operating profit for this fiscal year through March is expected at 22 billion yen ($222 million), which is almost double that of the previous year, due to strong ATM sales in China.
($1 = 99.2900 Japanese yen)
(AGENCIES)
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