* Fanuc up on upbeat Morgan Stanley MUFG note
* Renesas sags on capital-raising plan
* Nomura pressured by insider trading case
TOKYO, May 28 (Reuters) – Japan’s Nikkei average firmed on
Monday after eight straight weeks of declines, helped by gains
from widely held Fast Retailing and Fanuc Corp which outweighed
Renesas Electronics’ sharp tumble.
The Nikkei closed up 0.2 percent at 8,593.15,
staying firmly above the 8,500 support level but stopping short
of its 5-day moving average of 8,604.6.
Trading volume on the main board hit a three-week low at
just 1.3 billion shares traded, with a U.S. market holiday
coming up this week.
“Hedge funds are due to release their mid-term appraisals
soon so they’re probably indulging in a little window dressing
to keep the Nikkei above 8,500 to protect their positions,” said
Norihito Fujito, senior investment strategist at Mitsubishi UFJ
Morgan Stanley.
The broader Topix index inched down 0.1 percent to 721.11.
“The Topix moving in the opposite direction shows you the
real mood of the market. The Nikkei would have gone down too if
it wasn’t for Fast Retailing and Fanuc,” Fujito said.
Fanuc added 2 percent after Morgan Stanley MUFG
raised its price target on the industrial robot maker, saying a
recent correction in the stock was overdone, contributing 14.8
points to the Nikkei average, while widely held Fast Retailing
gave 10.8 points with its 2.2 percent gain.
Renesas sank 10.6 percent to a record low after
reports that it will sell off its loss-making operations and cut
12,000 jobs. NEC Corp, one of its
parent companies, tumbled 9.2 percent on the news.
Risk sentiment has been eroded in recent weeks by growing
concern about the impact of Greece’s possible exit from the euro
zone and slowing global growth, with the Nikkei average capping
its eighth week of declines on Friday, its worst weekly losing
run in 20 years.
“The market has been panicking for eight weeks. It’s
probably not sensible to forecast exactly when it will cease
panicking. It’s important to consider what it focuses on when it
ceases panicking, which is probably the extreme valuations,”
said Nicholas Smith, Japan strategist at CLSA.
The average price-to-book ratio of Nikkei companies now
stands at 0.9, less than half of the S&P; 500, which stands at
2.1. The market is still in oversold territory, with its 14-day
relative strength index at 29.2. An RSI of less than 30 is
considered oversold.
Gains of 1.6 percent for Canon Inc and 8.2 percent
for Sharp Corp after a recent battering also supported
the market.
Nomura Holdings pared losses in the afternoon to
close down 0.4 percent after Japan’s largest broker was linked
to a second insider trading case involving a fund management arm
of Sumitomo Mitsui Trust Holdings Inc.
“The market is bearish already but this could be a reason
for Nomura to be sold off even more,” said Fumiyuki Nakanishi,
general manager of investment and research at SMBC Friend
Securities. “It calls Nomura’s competence into question.”
A trader said the Topix was likely to hold firm at 700,
having bounced twice from such a level in March 2009 and
November 2011, and recommended investors buy Topix call options
at 755 with a September expiry. To finance the purchase of call
options, the trader suggested selling Topix put options at 675
in similar maturity.
