Nikkei dips on ex-dividend effect, Eisai falters

By Masayuki Kitano

TOKYO (BestGrowthStock) – Japan’s Nikkei average dipped 0.1 percent on Monday, backing off an 18-month high hit last week as shares with high dividend yields such as Eisai fell after going ex-dividend.

The Nikkei’s Friday rise, which at one point briefly took it over 11,000, plus the fact that Friday was the last day for investors to buy many Japanese stocks and still get dividends on them for the fiscal year that ends this month, meant the Nikkei was due for a pull-back, market players said.

But losses were limited due to market expectations for an improvement in corporate earnings in the 2010/11 financial year starting in April and for the global economy to stay on a recovery track.

That backdrop could allow Tokyo shares to outperform their Asian peers, at least for another few weeks, said Tomomi Yamashita, fund manager at Shinkin Asset Management.

“They could outperform quite strikingly in the early part of the April-June quarter, maybe over the next two or three weeks, on the back of a recovering U.S. economy,” Yamashita said.

“I think Japan’s external demand will probably be the biggest beneficiary of an economic recovery in the United States,” Yamashita said, adding that for this to happen, the dollar would have to rise against the yen.

The benchmark Nikkei lost 9.90 points to 10,986.47.

The Nikkei hit an 18-month intraday high of 11,001.59 on Friday, which was the deadline for investors to buy stocks and still be eligible for dividends for the financial year ending this month.

The broader Topix fell 0.1 percent to 966.13.

The next major resistance for the Nikkei lies at roughly 11,310, which is the 38.2 percent Fibonacci retracement of its slide from its 2007 peak down to its 2008 trough.

Some analysts said the Nikkei could rise well beyond such levels next quarter.

“At this point, we’re predicting that some 80 percent of companies are likely to see improved profits, and some analysts are even more optimistic,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

“This optimism will really start showing up in the market at the end of April, when Japanese earnings move into high gear, and in the next quarter the Nikkei may well rise as far as 12,000.”

High dividend yield shares figured prominently among the top percentage losers within the Nikkei index.

Drugmaker Eisai Co, which offered a dividend yield of 4.29 percent as of Friday’s close, the highest among the components of the Nikkei 225 average, fell 3.4 percent to 3,380 yen.

Shares of rival Takeda Pharmaceutical Co, which offered a yield of 4.23 percent, fell 2.8 percent to 4,135 yen.

Mizuho Financial Group, which offered a yield of 4.1 percent, shed 4.1 percent to 187 yen.

Game software developer Konami Corp slid 4.7 percent to 1,748 yen after Goldman Sachs initiated coverage with a “sell” rating and a 12-month target price of 1,960 yen.

Among the gainers was Seven & I Holdings, Japan’s largest retailer, which climbed 2.9 percent to 2,232 yen after Morgan Stanley Japan Securities upgraded the company’s shares to “overweight” from “equal-weight” and raised the price target to 2,700 yen from 2,400 yen, saying Seven & I was the retailer set to gain the most from a slower CPI fall and better employment.

Declining shares outnumbered advancing ones, 893 to 672.

Trading volume slipped back a bit from Friday’s two-week high, with roughly 2 billion shares changing hands on the Tokyo exchange’s first section.

Investment Research

(Additional reporting by Elaine Lies; Editing by Joseph Radford)

Nikkei dips on ex-dividend effect, Eisai falters