Visitors look at a monitor displaying market indices at the Tokyo Stock Exchange in Tokyo July 13, 2012.
Credit: Reuters/Toru Hanai
TOKYO |
TOKYO (Reuters) - Japan's Nikkei share average inched up on Wednesday morning as investors bought back battered China-related stocks after anti-Japan protests in the country did not intensify, while hopes for further monetary easing from the Bank of Japan lent support.
The Nikkei .N225 nudged up 0.2 percent to 9,141.73, helped by gains in firms with exposure to China that were heavily sold off on Tuesday after anti-Japan protests in China sparked by a territorial dispute led to closures of Japanese factories and shops.
"Since the situation neither improved nor worsened yesterday it's likely some people are buying back shares that were heavily sold off yesterday on a worst-case scenario," said Masayuki Doshida, a senior market researcher at Rakuten Securities.
Nissan Motor Co (7201.T) rebounded 1.6 percent after the company said it would resume production at four plants in Guangzhou and Zhengzhou in China on Wednesday after having halted operations there following anti-Japanese demonstrations.
Heavyweight Fast Retailing Co Ltd (9983.T) contributed 22.4 points to the benchmark, recovering 3.2 percent after sliding 7 percent on Tuesday, when the company closed more than 40 of its Uniqlo casual-clothing stores in China.
The broader Topix .TOPX, however, slipped 0.2 percent to 757.25 by the midday break.
"There's some short covering because the violence in China has eased but there hasn't been any fundamental solution to the dispute," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley.
"If Japanese firms close their factories in China it will also hurt Chinese GDP, which will deal a double blow to the Nikkei."
Concerns about Japanese companies' revenues garnered abroad were offset somewhat by a softer yen, although market watchers said the currency could strengthen if the Bank of Japan decides not to ease at its two-day meeting ending later on Wednesday.
"I think there's about a 60 percent chance of the BOJ easing," said Doshida. "The European Central Bank's decision to buy sovereign bonds and the U.S. Federal Reserve introducing QE3 has put pressure on the bank to follow suit to avoid the yen strengthening.
However, many investors doubted the BOJ would take action before its "tankan" survey of corporate sentiment at the end of the month.
"The BOJ remains a highly bureaucratic body that doesn't want to break with tradition," said Fujito of Mitsubishi UFJ Morgan Stanley. "It makes one wonder how they can be so blithe even though doing nothing will trigger a sell-off."
JAL RE-LISTING
The real estate sector .IRLTY.T was the worst-performing subindex on the Topix, slipping 0.5 percent in a reflection of investor uncertainty around the BOJ's decision.
The shipping index .ISHIP.T was the best sectoral gainer, rising 2.4 percent on gains for the Baltic Exchange's main sea freight index .BADI, which is used to track rates for ships carrying dry commodities.
Smaller shippers Meiji Shipping Co Ltd (9115.T) jumped 14.7 percent and Kyoei Tanker Co Ltd (9130.T) climbed 12.1 percent.
Elsewhere, Canon Inc (7751.T) lost 1 percent after Deutsche Bank lowered its price target and operating profit forecast, citing the significant impact from prolonged laser printer inventory corrections. The brokerage maintained its "buy" rating for the camera maker, however.
Japan Airlines Co Ltd's (9201.T) public re-listing drummed up strong demand, opening at 3,810 yen and trading at 3,830 yen by the midday break, 1.1 percent above the initial public offering price of 3,790 yen per share. It was the most-traded stock on the main board.
The IPO is the second-biggest in the world this year after social network Facebook Inc's (FB.O) $16 billion offering, raising 663 billion yen ($8.4 billion).
However, some investors were pessimistic about the stock price's prospects.
"Personally, I'm not too bullish on JAL. Low-cost carriers have a larger market share now and competition is fiercer. It's unclear whether they can maintain their current level of profit," said Masato Futoi, head of cash equity trading at Tokai Tokyo Securities.
(Additional reporting by Dominic Lau; Editing by Chris Gallagher)
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