FOCUS-Tokyo's Nikkei seen hitting 20,000 by March
By Ritsuko Ando
TOKYO, Nov 26 (Reuters) - Japanese information technology shares are likely to keep swaggering higher for the rest of the business year to next March, pulling the benchmark Nikkei average up to the magic 20,000 mark, market sources said.
But they added that corporate Japan's steady unwinding of cross-shareholdings among companies and a lack of investor confidence in areas outside the trendy information technology sector would force the Nikkei to stop for breath periodically as it climbs from its current perch just below 19,000.
''Telecoms and high-techs can and will gain further,'' said Kazunori Jinnai, deputy general manager at Daiwa Securities SB Capital Markets. ''Investment trusts are going to keep buying into such issues... There's no way they'd miss out.''
The Nikkei was at 18,682.50 by midday on Friday, after briefly breaking above the key psychological barrier of 19,000 on Wednesday. It was trading at around 16,000 last March.
NTT, SOFTBANK LEAD THE CHARGE
Information technology stocks, a loose cluster of shares comprising selected high-tech and telecommunications issues, have been lifted in recent months by a rise in high-tech stocks in the U.S. market and a heavy weighting in the portfolios of newly started investment trusts.
Nippon Telegraph and Telephone Corp (NTT) , a core issue in Japan's telecommunications sector, finished on Thursday at 1.87 million yen, nearly double its value from a year ago.
Softbank Corp , an aggressive Internet investment company, last traded at 74,900 yen, up more than 10-fold from the beginning of the year. Although the issue is not included in the Nikkei average, it is considered a benchmark for assessing market confidence in domestic high-technology shares.
Expectations that more new stock investment trusts will buy into the sector should keep it at the centre of the market's attention, traders said.
One strategist at a Japanese brokerage said these info-tech shares should rise further if computer systems run smoothly in the new year without any millennium bug-related glitches.
A trader at another brokerage said that, looking at the information-technology sector alone, there was room for further rises.
''Of course the sector has been rising a bit too rapidly as of late, but in the medium to long term, this is the sector that is going to see the most growth,'' he said.
DOMESTIC-ORIENTED SECTORS TO SEE VOLATILITY
As for other sectors, players said domestic-oriented stocks such as basic industries, construction and real estate would be prone to whimsical trade.
''Domestic demand-related shares and cheaper stocks will be picked up along the way, and sold quickly for profits,'' said Hiroshi Sato, equities and bonds manager at Cosmo Securities.
Some pointed out that the unwinding of cross-shareholdings by companies and financial institutions would grow more prevalent in the market as Japanese firms restructure their finances, which could be especially damaging to the basic industry and real estate sectors.
Traders also said the Nikkei's reliance on a narrow range of shares for its gains was a major source of downside risk, although many forecast it would be supported at around 18,000 to the end of next March, helped by steady economic recovery.
For the 1999 calendar year, traders saw little likelihood the Nikkei would break beyond 20,000, although thin trading before the year-end could cause exaggerate moves in indices. |
