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Nikkei Rises as Weak Yen Lifts Exporters

Nikkei Rises as Weak Yen Lifts ExportersNikkei Rises as Weak Yen Lifts Exporters

Japan's Nikkei share average rose modestly on Tuesday after the yen dropped to a six-year low against the dollar, lifting  exporters such as Honda Motor Co and Sony Corp, but weak crude oil prices weighed on energy shares.

The Nikkei rose 0.4 percent to 15,774.21 points by

mid-morning, moving close to its seven-month high of 15,829.38 hit last week, Reuters reported.

Honda gained 1.2 percent and Sony added 1.3 percent, while Advantest Corp advanced 2.5 percent.

A weaker yen helps Japanese exporters' competitiveness abroad as well as their profits when repatriated.

Analysts said that while most companies have based their foreign currency assumptions at around 100 yen for the fiscal year through March, the current dollar-yen level is serving as a tailwind to major exporters.

According to Nomura Securities, companies listed on the Topix are expected to post a total of 61.5 trillion yen ($580b) in operating profits for the year through March, and when the yen weakens by 1 yen against the dollar, it would lift the aggregate operating profits by 300 billion yen.

But they also added that thin volume was a concern as some investors remain on the sidelines in the wake of weak Japanese economic data.

"Investors are uncertain about Japan's growth so they want to wait until good news comes out (before investing aggressively)," said Hiromichi Tamura, chief strategist at Nomura Securities, citing Monday's revised Japanese GDP report, which showed the economy contracted more than initially expected

in the second quarter.

Oil shares and trading houses underperformed, with Inpex Corp falling 1.2 percent, Mitsubishi Corp shedding 0.1 percent and Sumitomo Corp declining 0.1

percent after Brent crude fell below $100 a barrel for the first time in 16 months.

The broader Topix gained 0.1 percent to 1,299.89 and

the JPX-Nikkei Index 400 added 0.1 percent to

 

Financialtribune.com