Japan market summary for Wednesday (Nov. 28)
Nikkei 225 Stock Average: -69.07 (-0.5%) to 15,153.78
Nikkei 225 futures Osaka: -80 (-0.5%) to 15,160, Singapore (SGX) -50 (-0.3%) to 15,170, Chicago (CME) *11/27 +420 (+2.8%) to 15,270
TOPIX: -3.14 (-0.2%) to 1,475.64; Advancers 835 x decliners 762 (unch. 125), New highs 3 x new lows 42
Nikkei Jasdaq: +7.97 (+0.5%) to 1,739.09
Yen: weakened 0.8% against the US$ to the 109.00 level late in Tokyo; weakened 0.2% against the euro to the 160.50 level
Notes: Larger cap stocks failed to rally despite a 420 point gain in N225 futures in Chicago and solid gains in U.S. stocks. The Nikkei 225 fell for the first time in four sessions, TOPIX the first time in three. Bulls were restrained probably on doubt of whether a U.S. rally is sustainable and over uncertainty of what type of bad news might hit the wires next.
One key issue is foreign players continue to be net sellers by at least one gauge. Another matter, is the fact that bad news is seemingly bad news to Japanese eyes, while bad news is good news to American eyes. Here were referring to speculation over another Fed rate cut.
At any rate, the buy action was in the smaller caps, particularly MOTHERS +4.8% and HERCULES +2.5%.
The logic is, a stronger yen and high oil don’t necessarily impact the pure domestic-demand stocks. Therefore, previous indiscriminate selling of certain quality names makes a compelling case to go long and wait for the market to make amends. There’s also the rising tide factor at work and it doesn’t take much.
For long investors the same logic can be applied to blue chips as well.
Sony (JP: 6758) (NYSE: SNE) has remained hot after news of a big investment from Dubai. Plus its new, cheaper 40GB PS3 has been outselling Nintendo’s Wii in recent weeks in Japan, the first time this has happened since he two consoles debuted about a year ago.
ORIX (JP: 8591) (NYSE: IX) seems to have bottomed after a recent report of it having the highest foreign stock ownership at more than two-thirds. The question is if foreigners are still buying or Japanese are now buying too. At current levels its valuation seems attractive regardless.
Wacoal (JP: 3591) (Nasdaq: WACLY) has been on our watch list for a while. It traded higher on news of a big share buyback amounting to nearly 3% of shares outstanding. Wacoal trades right about book value and has a very high capital ratio.
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