Nikkei Index Breaks 15,000 for First Time Since 2007

Japanese stocks have soared since November, when Shinzo Abe, who took over as prime minister in December, vowed to pursue aggressive steps to combat persistent deflation and lift the economy out of years of feeble growth.

Adding to the momentum on Wednesday was a 10.6 percent surge in the shares of Sony; the company on Tuesday came under pressure from the investor and billionaire hedge fund manager Daniel S. Loeb to spin off part of its entertainment arm.

Mr. Loeb argued that the move would allow to sharpen its focus and lead to higher profit margins, while helping revive the core electronics business.

Sony shares, which have rallied strongly this year, in part because a weaker yen has improved its earnings prospects, were worth ¥2,072, or $20.28, apiece by the close of trading in Tokyo on Wednesday, more than twice where they began the year. That is the highest since July 2011.

The yen’s fall on the currencies markets — the Japanese currency has dropped about 17 percent against the U.S. dollar so far this year — has been a major boon to Japanese exporters, whose goods and services have become cheaper for customers abroad as a result.

Numerous companies have in recent weeks cited the weaker yen as a reason for improved earnings, helping to lift the overall stock market.

Since the start of the year, the Nikkei 225 has risen more than 40 percent, and on Wednesday the index closed at 15,096 points.

The yen was trading at 102.37 to the dollar, compared with ¥86.67 per dollar at the start of the year.

Meanwhile, gross domestic product data for the first three months of 2013, due out Thursday, also are likely to illustrate Japan’s improved prospects.

The figures are expected to show that the Japanese economy grew 0.7 percent from the previous quarter, according to analysts polled by Reuters.

Mr. Abe “wasted no time launching the first two ‘arrows’ of his three-pronged economic agenda, delivering bold fiscal and monetary stimulus that has weakened the JPY and lifted equities to five year highs,” Izumi Devalier, Japan economist at HSBC, wrote in a research note on Wednesday, referring to the Japanese currency.

But Ms. Devalier also struck a note of skepticism, saying the long-term success of what has been dubbed “Abenomics” hinged on “the third and most important arrow — structural reforms.”

“Deep reforms,” she wrote, “are in danger of being shelved due to push back from bureaucrats, unions, and even pockets of Abe’s own party.”

Article source: http://www.nytimes.com/2013/05/16/business/global/nikkei-index-breaks-15000-for-first-time-since-2007.html?partner=rss&emc=rss