Tokyo Tech Stocks Expected to Recover
By Ritsuko Ando Jan 8 8:17pm ET
TOKYO (Reuters) - Tokyo's battered high-tech stocks are expected to regain their poise this week, boosted after U.S. markets rallied on Friday despite a stronger-than-expected jobs report.
The Nikkei closed on Friday at 18,193.41, slightly firmer than Thursday, but the capital-weighted TOPIX index of all first-section shares closed down 10.58 points or 0.66 percent at 1,599.01, suffering from selling pressure in large-cap issues.
Japan's high-tech stocks suffered last week after sharp falls on the Nasdaq market -- which was down as much as 10 percent from last Monday's record close -- and a comment by Sony Corp's president that his company's shares were overvalued, which dragged down the whole sector.
Most traders see the Nikkei trading around 17,500 to 18,500 this week. The market is closed on Monday for a national holiday.
``It all depends on what happens in New York, really,' said Toshihiko Matsuno, investment advisory manager at Yamatane Securities. ``That, and when high-techs like Sony, Softbank, and Kyocera bottom out.'
HI-TECHS SHOULD COME BACK INTO FAVOR
While buying in Tokyo last week seemed to be rotating into defensive stocks such as pharmaceuticals, chemicals, and other basic material makers, traders said high-techs would again come back into favor once the U.S. equity market came to terms with the prospect of rising interest rates.
The U.S. jobs report on Friday, which highlighted a strong rise in wages, seemed to reassure investors that the Federal Reserve's rate-setting committee will raise rates only slightly when it meets Feb 1 and 2. Most analysts expect a hike of 25 basis points or 0.25 percentage points.
The Dow Jones Industrial Average closed at a record high of 11,522.56, up 269.30 points.
The Nasdaq composite index finished up 155.49 points -- the biggest point gain in its 28-year history. That increase of 4.17 percent drove the Nasdaq up to close at 3,882.62.
CORRECTION WAS NEEDED
Most players in Japan said last week's losses were part of a temporary and necessary correction after buying concentrated heavily in high-tech shares over the past few months.
``Some infotech stocks like Fujitsu have finally hit their 25-day moving averages, and are now ready to make a comeback,' said Hiroichi Nishi, deputy general manager at Nikko Securities.
Sony Corp shares plunged by their daily limit for two straight days last week, closing at 23,700, a loss of more than 25 percent since it surged on the first trading day of the year to 32,250.
In addition to concerns over the Nasdaq, Sony shares came under selling pressure after President Nobuyuki Idei told Reuters during Thursday's market break that 20,000 yen was an appropriate share price and anything higher would be a 'bubble.'
Idei's comments sparked selling in other hightech and electronics stocks such as Fujitsu Ltd, Hitachi Ltd, and Internet investor Softbank Corp
Softbank shares finished down by their daily limit of 5,000 yen or 6.13 percent at 76,600 on Friday.
Kyocera, a well-known maker of semiconductor components, also closed down by its daily limit on Friday, ending 2,000 yen or 9.76 percent weaker at 18,500.
On the technical front, traders say they would be watching a gap on the downside between 17,450 and 17,740. There is also a gap on the upside between 18,580 and 18,940, created when the market fell heavily last Wednesday.
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