Reuters: Market News: Nikkei knocked from one-year high by ex-dividend shares

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Nikkei knocked from one-year high by ex-dividend shares Mar 28th 2012, 03:29 Tue Mar 27, 2012 11:29pm EDT * Majority of companies traded without right to dividend * Sharp sees glut of buy orders after Hon Hai deal * Sony up after CEO says to stay in charge of TV ops * Pioneer climbs after JPMorgan price target hike By Dominic Lau TOKYO, March 28 (Reuters) - Japan's Nikkei average fell on Wednesday after rallying 2.4 percent the previous day to its highest close since last year's massive earthquake, as a majority of the companies in the index went ex-dividend. By the midday break, the Nikkei was down 103.83 points, or 1 percent, at 10,151.32, as dealers said 195 out of 225 companies passed the deadline for purchasers of stock to get rights to dividends for the business year to March 31. Dealers had expected the ex-dividend impact to take 86 points off the benchmark. Mizuho Financial Group slipped 3.5 percent and was the third-most heavily traded stock on the main board by turnover, as it carries the highest dividend yield on the Nikkei, data from Thomson Reuters Datastream showed. Takeda Pharmaceutical Co Ltd, which has the second-highest dividend yield among Nikkei companies, was the fifth-most heavily traded stock. Its shares fell 3.6 percent. Others that fell included NTT DoCoMo Inc, down 2.5 percent, and Sumitomo Mitsui Financial Group, losing 1.7 percent. Still, market participants expected domestic passive funds to reinvest their dividends, which would push stocks higher. "(Passive funds) might put in orders closer to the market close. Also, funds can reinvest up to the end of the 30th, so I don't think they're in a rush to do it now," said Hiroyuki Fukunaga, CEO of Investrust. "If trading doesn't drop off in the afternoon, I would say it would show that passive funds are buying," he added. Wednesday's fall took the Nikkei's 14-day relative strength index to 66.7, after holding above 70, or 'overbought' territory, for most of March and February. The Nikkei is still up 20 percent this year, buoyed by a run of strong U.S. economic data and accommodative monetary policies by central banks across the globe. The broader Topix index dropped 1.2 percent, or 10.30 points, to 862.12, with traders saying the ex-dividend effect took about 8.4 points off the index. "Foreigners are buyers for the 12th straight week, so we are on pace there ... Overall the upward trend is still in place," said a senior dealer at a foreign bank. "The market is down because of ex-div ... We are still seeing better interest in buying auto stocks." Mazda Motor Corp rose 1.4 percent and Toyota Motor Corp added 0.3 percent. The Topix's transport equipment subindex, home to Toyota, is among sectors that have seen a sharp improvement in the earnings outlook. The earnings momentum - analysts' earnings upgrades minus downgrades as a percentage of total estimates - for the sector rose to 19 percent from flat in February, according to Thomson Reuters I/B/E/S. That compares with earnings momentum of 3.6 percent for the Topix. Trading volume on the main board after the morning session was average at 52 percent of its full daily average for the past 90 days. SHARP IN SPOTLIGHT Sharp was untraded with a glut of buy orders after saying it will issue shares worth $808 million to Taiwan's Hon Hai Precision Industry as part of a tie-up in liquid crystal display production. On the Instinet trading platform, Sharp shares surged 18.5 percent to 590 yen. Toppan Printing Co Ltd climbed 3.7 percent and Dai Nippon Printing Co Ltd advanced 0.7 percent. The two companies supply colour filters to Sharp. Sony Corp gained 2.2 percent after its CEO Kazuo Hirai signalled his determination to turn around the group's ailing TV business by remaining directly in charge of the division, as the Japanese brand fights to regain ground against rivals such as Apple. Within the electronic machinery sector, Pioneer Corp rose 3.8 percent to 414 yen after JPMorgan raised the stock's price target to 570 yen from 540, citing expectations for a sharp recovery in the car electronics business in the first half of 2012. It kept an "overweight" rating on the stock. Link this Share this Digg this Email Reprints

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