Nikkei rises to fresh 15-year high

Fed continues to support mood as pension fund investment strategy also lifts sentiment

Japan’s Nikkei share average rose to a fresh 15-year high yesterday morning after hedge funds were seen buying futures, while indexheavyweight stocks rose as investors’ risk appetite improved on benign comments by Fed Chair Janet Yellen.

The Nikkei rose 0.4 per cent to 18,662.66 in midmorning trade after rising as high as 18,694.74 earlier, the highest since April 2000.

Analysts say that investors have become more risk-taking since Yellen’s congressional testimony on Tuesday and Wednesday hinted the Fed is in no rush to raise rates.

“It’s mainly derivatives ... hedge funds are seen covering their short positions from their selling in early January and even started piling up new long positions,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Market watchers said sentiment was also lifted by news that the Federation of National Public Service Personnel Mutual Aid Associations, the body managing Japan’s national civil service pensions, will raise its target allocation for domestic stocks to 25 per cent from 8 per cent.

Japanese bonds

Also known by the acronym KKR, the pension fund will slash the weighting of Japanese bonds in its portfolio to 35 per cent from 74 per cent.

“This officially-announced drastic investment strategy is giving renewed excitement to the market,” said Shigemitsu Tsuruta, senior strategist at SMBC Friend Securities.

Index-heavyweight stocks outperformed, with Softbank Corp rising 1.8 per cent and Fast Retailing Co advancing 1.3 per cent. The two companies together drove up the Nikkei 37 points, nearly half the index’s point gains.