Nikkei climbs to 2-week high on banks, component makers

Dominic Lau
Wednesday, 22 Jan 2014 | 8:39 PM ET

* Nidec, Japan Aviation jump after quarterly results

* Banks in demand as investors seek underperformers

TOKYO, Jan 23 (Reuters) - Japan's Nikkei stock average advanced to a two-week high on Thursday, helped by gains in electronics component makers after strong results from Nidec, while some investors sought underperformers in the banking sector. The Nikkei was up 0.7 percent at 15,925.51 after rising as high as 15,958.58 - edging closer to the 16,000 mark it had crossed last month for the first time in six years. Still, the benchmark has so far got off to a slow start this year after rallying 57 percent in 2013, its best annual performance since 1972 on the back of Japan's massive fiscal and monetary stimulus. Nidec Corp climbed 3.9 percent after the precision motor maker lifted its operating profit estimate for the year ending March by 6.3 percent to 85 billion yen ($815 million) and its annual dividend forecast by 11 percent to 100 yen per share. It also announced a plan to buy back up to 24 billion yen worth of its own shares, equivalent to 1.45 percent of its outstanding stock, between Jan. 27, 2014 and Jan. 26, 2015. Japan Aviation Electronics Industry Ltd, an Apple Inc supplier, surged 12.6 percent after it raised its annual earnings forecast for the second time this fiscal year, by 18 percent to 14.8 billion yen, on the back of stronger-than-expected sales of telecommunications and automotive connectors. According to Thomson Reuters StarMine, Japan Aviation Electronics shares were still 17 percent below their intrinsic value of 2,021 yen. "What I see is that people are looking for very selective buying at the moment with strong fundamentals," a Tokyo-based trader said. "There is a huge concern on the April-June quarter after the sales tax hike. People don't know how much impact it will have on consumption." Underscoring the worries about the tax's impact, Japanese business sentiment is expected to slide after the hike in April, even though it improved for a third straight month in January, a Reuters poll showed. The broader Topix index added 0.3 percent to 1,303.47, with volume at 33 percent of the full daily average for the past 90 trading days. Banks were higher, with Mizuho Financial Group up 2.1 percent, Mitsubishi UFJ Financial Group adding 0.9 percent and Sumitomo Mitsui Financial Group up 1.2 percent. A bullish report on Mizuho, the most-traded stock on the main board, from Goldman Sachs this week also boosted the sector. Mitsubishi UFJ was the third-most traded. The banking sector gained 50 percent in 2013, underperforming the Nikkei. The JPX-Nikkei Index 400, a recently introduced gauge comprised of companies with a high return on equity and robust corporate governance, rose 0.3 percent to 11,764.68. Mitsubishi Motors Corp, the second-most traded stock on the main board, seesawed after it priced an offering of new shares at 1,120 yen each, a 4 percent discount from Wednesday's close. It was last up 0.2 percent.

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