By Taiga Uranaka / Reuters
Tokyo: The Nikkei average rose 1.1% on Monday as exporters gained on a softer yen and a recent fall in oil prices that eased worries about corporate earnings amid a deteriorating outlook for the global economy.
The benchmark index also got a boost from construction machinery maker Komatsu Ltd which ended 3.8% higher after Nikko Citi raised its rating, saying resource-rich countries were expected to continue to drive earnings in the face of the mounting risk of a global slowdown.
“There has been a tug of war between negative fundamentals such as the economic slowdown and positive factors for corporate earnings such as a softer yen and fall in oil prices,” said Yukio Takahashi, market analyst at Shinko Securities.
“The market seems to have priced in the negatives to a certain degree and was reacting to positives today,” he said.
The benchmark Nikkei ended up 146.04 points at 13,165.45. The broader Topix climbed 1.3% to 1,263.75.
Takahashi and other market analysts said the day’s gains were mostly due to buying back of recently battered stocks, however, and the market was likely to move in a narrow range this week with a lack of clear factors to drive it higher.
Some market participants said streamlining stock taxation would be the best and simplest way to lure investors.
As part of government efforts to shore up Japan’s flagging economy, some policymakers have suggested tax breaks on stock investments.
Ruling Liberal Democratic Party Secretary-General Taro Aso has proposed a tax exemption on dividend income on investments of up to 3 million yen ($27,230).
Masanobu Takahashi, chief strategist at Ichiyoshi Securities, said the current scheme was too complicated for many retail investors to understand, with time-limited tax breaks and investment income thresholds.
“The government should stop double taxation (on corporate profits before dividend and investors’ dividend income) by abolishing dividend income tax all together, and raise capital income tax back to 20% instead,” he said. “Such a move alone would lift the stock market.”
Exporters, banks surge
Sumitomo Metal Industries Ltd jumped 7.4% to 481 yen, becoming the biggest percentage gainer on the Nikkei, after Mitsubishi UFJ Securities lifted its rating, saying the steelmaker was expected to be able to raise prices of its seamless pipes used in the oil industry.
Sony Corp rose 2.6% to 4,350 yen, and electronics parts maker Kyocera Corp added 1.8% to 9,590 yen.
Komatsu shares rose 3.8% to 2,445 yen after Nikko Citi raised its rating to “buy/high risk” from “hold/high risk.”
Aderans Holdings Co plunged 9.7% to 1,770 yen after the wig maker cut its full-year profit outlook on Friday, hurt by weak sales of female wigs in Japan and a dismal hair transplant business in the United States amid an economic slowdown.
It now expects its operating profit to fall to 2.7 billion yen ($24.45 million) for the year to next February, down from 5.4 billion yen in its previous forecast.
Trade was light on the Tokyo exchange’s first section, with 1.7 billion shares changing hands, below last week’s daily average of 1.9 billion.
Advancing stocks outnumbered declining ones by nearly 4 to 1.