TOKYO: Tokyo stocks edged higher on Thursday as the benchmark Nikkei Stock Average eked out a fresh 15-year high, helped by a surge in insurers and real estate developers.
The upward price movement has pushed total market capitalisation for the broader market close to a record high.
The Nikkei ended up 6.31 points, or less than 0.1 per cent, at 20,202.87, for its ninth rise in the last 10 sessions. Participation remained fairly brisk, topping the 2.5 billion share level for the 10th straight day.
“The market remains resilient, ostensibly assisted by the classic ‘Abenomics’ formula of weak yen that fuels higher exporter profits. But interestingly, exporters are not the leaders,” said Daiwa Securities chief technical analyst Eiji Kinouchi.
“It’s probably fair to say that equity buying by big players such as the Bank of Japan, the GPIF (Government Pension Investment Fund), smaller pension funds, as well as Japan Post (ahead of its IPO later this year) is keeping the market well supported, with or without added yen weakness,” said Daisuke Uno, strategist at Sumitomo Mitsui Banking Corp.
Thursday’s move put the total market cap value of the Topix index of all the Tokyo Stock Exchange First Section issues at Y590.794 trillion. This compares with the 1989 peak of Y590.908 trillion. But analysts were unperturbed.
“The large market cap level is really no cause for alarm, because listed corporations are 2.2 times more profitable than they were back then,” said Nomura Securities equity market strategist Junichi Wako. “In terms of profitability, profit growth, and return on equity (ROE), prices as a whole are not out of hand.”
Stock trading did not appear affected by a slight uptick in the HSBC’s May manufacturing Purchasing Managers’ Index for China.
Insurers led the market higher, with MS&AD Holdings adding 5.4 per cent after posting a bright current fiscal year earnings forecast which calls for consolidated net profit growth of 15 per cent to 157 billion yen — its best ever mark for profits.
T&D Holdings also gained 1.2 per cent after announcing that it plans to buy back up to Y30 billion worth of its own shares (3 per cent of the total outstanding) and issue Y30 billion of callable convertible bonds. The move garnered praise for its investor-friendliness; analysts said the bond issuance does not strike as a negative, as the paper are unlikely to be converted to dilute the common stock.
