Japanese stocks should look attractive to investors

TOKYO: AFTER recent losses Japanese shares should continue to look attractive to investors, but global uncertainty could prolong directionless trade in the coming week, analysts said last Friday.

Bargain hunting should prevent sharp drops, but the Tokyo bourse might become volatile depending on US economic data to be released in the coming week, they said.

The market was expected to shrug off the appointment of a new Japanese prime minister in the coming week, however, they added.

In the week to August 26, the Nikkei Index at the Tokyo Stock Exchange gained 0.90% or 78.54 points to 8,797.78. The Topix Index of all first section shares rose 0.58% or 4.38 points to 756.07.

The market took a pause after sharp drops seen earlier this month, when US and European economic uncertainty sent players into risk avoidance mode, selling off global shares.

Investors are awaiting for major US indicators, including manufacturing and jobs data.

“The market will continue to move nervously with eyes on a series of upcoming US economic data,” said Kenichi Hirano, operating officer at Tachibana Securities.

Toshihiko Matsuno, senior strategist at SMBC Friend Securities Co., said: “The market will lack clear direction. It will take cues from economic data.”

The continuing strength of the yen was seen as possible counter-pressure, with exporters expected to continue to suffer. The market would likely ignore Japan's political turmoil.

Japan was expected to name a new prime minister after unpopular incumbent Naoto Kan officially announced a plan to step down.

Kan, last Friday stepped down as the ruling party president, paving the way for the selection of the disaster-hit nation's sixth new premier in five years. AFP