By Kosaku Narioka
TOKYO--Japanese stocks hit a seven-year high Thursday, propelled
by upbeat earnings outlooks and shareholder friendly moves by
companies.
The Nikkei Stock Average rose 1.9% to 17979.72, its highest
close since July 2007, after blue chips including Nissan Motor Co.,
Sony Corp. and Fujifilm Holdings Corp. issued solid earnings
forecasts in recent days.
"Corporate earnings are good" and likely to improve this fiscal
year and next, partly due to a weaker yen, said Koji Uchida, chief
fund manager at Mitsubishi UFJ Asset Management Co., which manages
Yen8.5 trillion ($71 billion).
Of the 157 companies that have reported earnings so far this
season, and whose earnings were projected by Nomura Securities Co.,
38% reported profits more than 10% higher than analysts' forecasts,
according to the brokerage. Only 11% reported earnings that missed
estimates by more than 10%, it said.
Nomura said positive surprises were seen in chemicals, steel and
nonferrous metals, and pharmaceuticals and health-care sectors.
Nissan Motor Co. raised its full-year profit forecast Monday,
helped by a weak yen and strong sales in the U.S. Sony said this
month it would post a Yen20 billion operating profit for the year
ending March 31, after previously predicting a loss. The better
outlook was driven by strong sales of products such as its
PlayStation 4 videogame consoles and by cost-cutting.
In late January, Fujifilm raised its forecast for net profit for
the full fiscal year ending March 31, citing a weaker yen and a
recovery in camera sales.
The road ahead isn't risk-free, though. While the U.S. economy
is gaining traction, the outlook remains shaky in Europe, which
still faces the threat of deflation and an exit from the eurozone
by Greece. Any flare-up of crises there would strengthen the yen,
hurting Japanese exporters.
On the downside Thursday, shares in fuel distributor Showa Shell
Sekiyu K.K. fell 6.2% after the company reported a net loss Tuesday
of Yen9.7 billion, citing lower oil prices. Japanese markets were
closed Wednesday for a national holiday.
Still, investors are encouraged to see more Japanese companies
acting with shareholders in mind--either spending for growth or
returning money. Shares of retail-store operator Marui Group Co.,
for instance, jumped 16% Thursday after the company announced a
share buyback plan.
U.S. investor Daniel Loeb's hedge fund Third Point LLC, for
example, said in a quarterly letter released Monday that it has
built a stake in industrial robot maker Fanuc Corp., and suggested
the company buy back shares. Fanuc shares have gained 10% since
Third Point disclosed its stake.
Nomura projects the total amount of dividends and share
repurchases will reach a record Yen13.3 trillion in the fiscal year
ending in March 2016, exceeding a Yen12 trillion estimated for this
fiscal year.
Shares in Canon Inc. rose 1.7% Thursday as investors got their
first chance to react to the news, announced Tuesday, that the
company plans to acquire Axis AB, a Swedish network video solutions
provider, for around $2.8 billion in a search for growth outside
its struggling traditional businesses.
"They are finally starting to use some cash. Their shareholder
returns have been great, but what we rather wanted to see was
spending for growth," Mitsushige Akino, chief fund manager at
Ichiyoshi Investment Management, said of Canon.
Japanese companies listed on the first section of the Tokyo
Stock Exchange logged a combined 3.0% on-year rise in net profit
for the nine-month period through December, according to SMBC Nikko
Securities. The data cover the 77% of companies listed on the first
section that had released earnings as of Feb. 6.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
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