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Nikkei set to touch 20,000 level this week

TOKYO: Tokyo stocks are expected to trade firmer this week, boosted by brisk buying from investment trusts and pension funds but the upside is likely to be limited as companies sell shares ahead of earnings results, traders said.

"The Nikkei is very likely to touch 20,000 this week, but it is unlikely to hold on to that level on the back of the unwinding of cross-held shares," said Masayoshi Okamoto, a trader at Jujiya Securities.

Companies traditionally sell more of their cross-held shares early in the year ahead of the end-March book closings so as to help boost their figures, traders say.

Tokyo's benchmark Nikkei average ended barely changed last Friday, dipping 2.37 points or 0.01 percent to 19,789.03. For this week traders expect it to move in a range between 19,500 and 20,300.

The last time the Nikkei rose above the 20,000 mark was February 9, after the setting up of Nomura Asset Management's blockbuster investment trust, with an initial subscription of 792 billion yen (US$7.36 billion).

On Friday, five new investment trusts are scheduled to be set up, with an initial fund ceiling of 520 billion yen.

Overall last week, the Nikkei just managed to eke out a 0.4 percent gain as investors instead focused on the over-the-counter market.

On the week, the Nikkei OTC index gained 9.68 percent to 2,657.12, supported in part by active buying from pension funds and investment trusts.

Institutional investors were attracted to the OTC market as OTC stocks, few of which are cross-held among corporations, are not susceptible to the ongoing unloading of cross-held shares. Traders expect them to remain strong in the coming sessions.

Looking ahead, foreign investors are expected to step in for bargain hunting sometime in March once unwinding of cross shareholdings subsides, said Masatoshi Sato, equity manager at Kankaku Securities.

He also said foreign buying might increase after the release of gross domestic product data for the last quarter of 1999, due out in mid-March, in anticipation there would be no more major negative factors for the time being.

The GDP for the October-December period is widely expected to show negative growth for the second quarter in a row.

"Whatever the cue is, this (enhanced buying by foreign investors) would help the Nikkei to establish a secure foothold above 20,000," Sato said.

Active foreign buying by foreign investors was a major force behind Tokyo shares' strong showing last year.

Major events likely to affect the stock market this week are as follows.

On Monday Nissan Motor, Toyota Motor and Honda Motor to announce vehicle output, domestic sales and exports data for January.

On Tuesday Bridgestone Corp to announce earnings results for year ended December 1999.

On Wednesday Nasdaq Japan Planning to announce listing standards for the Nasdaq Japan market, set to start trading by the end of June.

On Thursday January department stores sales data to be released by the Japan Department Stores' Association.

On Friday Showa Denko to announce earnings results for the year to December 1999. Rock Field Co LTd to be listed on the first section of the Tokyo Stock Exchange.-Reuters