Tokyo’s Nikkei ends 2016 with high­est close in two decades

Kuwait Times - - BUSINESS -

TOKYO:

Tokyo’s bench­mark stock in­dex ended a volatile 2016 on a down note yes­ter­day, but still hit the high­est year-end close in two decades on op­ti­mism over the in­com­ing US gov­ern­ment. Pres­i­dent-elect Don­ald Trump’s sur­prise elec­tion vic­tory last month has sparked a rally in global eq­uity mar­kets and pushed the dol­lar higher on ex­pec­ta­tions of big gov­ern­ment spend­ing and a rise in in­ter­est rates. “Trump was a game changer,” said Hisao Mat­suura, chief strate­gist at No­mura Se­cu­ri­ties. Mat­suura said that early this year in­vestors had grown weary of ac­com­moda­tive cen­tral bank mon­e­tary poli­cies while recog­nis­ing that their ef­fec­tive­ness was wan­ing. “So the fis­cal stim­u­lus from the US, even if it’s not hap­pen­ing now, is pos­i­tive news,” he said. “The mar­ket is chang­ing from mon­e­tary to fis­cal poli­cies.”

Ja­pan’s bench­mark Nikkei 225 in­dex rose 0.42 per­cent in 2016 to close at 19,114.37, mark­ing the fifth con­sec­u­tive an­nual in­crease and high­est year-end fin­ish since 1996 when it ended at 19,361.35. Yes­ter­day, how­ever, it lost 0.16 per­cent, or 30.77 points, tak­ing its down­ward lead from the US overnight. The broader Topix in­dex of all first-sec­tion shares was un­able to keep pace this year, los­ing 1.85 per­cent to 1,518.61, snap­ping four years of gains.

It man­aged to edge up 0.01 per­cent, or 0.22 points yes­ter­day. The Nikkei fell be­low the psy­cho­log­i­cally im­por­tant 15,000 mark in late June af­ter Bri­tain’s vote to exit the EU pum­meled world mar­kets, while a strong yen hit Ja­panese ex­porters. But the in­dex re­gained vigor since Trump was elected as deal­ers bet his plans for big spend­ing and tax cuts will fan in­fla­tion and force the Fed­eral Reserve to more ag­gres­sively hike in­ter­est ratessend­ing the dol­lar soar­ing against the yen. A weaker yen is gen­er­ally good for prof­its for Ja­panese com­pa­nies do­ing busi­ness abroad, stok­ing de­mand for their shares.

‘Op­ti­mistic sce­nario’

An­a­lysts were gen­er­ally up­beat on the prospects for Ja­panese eq­ui­ties in 2016. “We ex­pect the Nikkei to go be­yond 21,000 points in 2017,” said Kazuhiro Taka­hashi, eq­uity se­nior strate­gist at Daiwa Se­cu­ri­ties. “It could even ap­pre­ci­ate to 23,000 points”, he added. “That’s the op­ti­mistic sce­nario.”

Shares in trou­bled Toshiba jumped Fri­day fol­low­ing a three-day blood­let­ting in which in­vestors dumped the stock over ex­pec­ta­tions of a mas­sive one-time loss. Toshiba rose 9.43 per­cent to 283.1 yen af­ter los­ing some 40 per­cent from Tues­day through to Thurs­day. The com­pany this week warned of a pos­si­ble loss of sev­eral bil­lion dol­lars in its US nu­clear busi­ness but said the ex­act fig­ure had yet to be de­ter­mined, which fu­elled in­vestor anx­i­ety. “Some play­ers bought on dips to­day but it’s still un­cer­tain if Toshiba shares will con­tinue to re­cover next year,” said Hikaru Sato, se­nior tech­ni­cal an­a­lyst at the in­vest­ment strat­egy sec­tion at Daiwa Se­cu­ri­ties.

Auto parts maker Takata surged 21.21 per­cent to 857 yen, adding to a 16.47 per­cent jump the day be­fore af­ter news it is close to set­tling a US crim­i­nal probe into an ex­plod­ing airbag scan­dal. Mar­ket heavy­weight Fast Retailing was down 1.94 per­cent at 41,830 yen, Sony fell 0.72 per­cent at 3,275 yen, while Nis­san de­clined 0.42 per­cent at 1,175.5 yen.

In cur­ren­cies, the dol­lar bought 116.80 yen in Tokyo, up mod­estly from 116.63 yen in New York. On Wall Street, the Dow Jones In­dus­trial Av­er­age shed 0.1 per­cent to 19,819.78. The broad-based S&P 500 slipped marginally to 2,249.26, while the tech-rich Nas­daq Com­pos­ite In­dex dropped 0.1 per­cent to 5,432.09. —AFP

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