Japan's Nikkei average rose for a fifth straight day to end at a 21-month closing high on Tuesday, as investors continued to buy banks and other domestic-oriented shares on hopes for an economic recovery led by local demand.
Traders said foreign and retail investors were active buyers in the market -- a trend that was signaled before the open. Orders placed through 12 foreign brokers before the start of trading showed an intention to buy a net 42.8 million shares, the highest level so far this year.
"Many investors probably don't own many domestic-oriented shares to begin with, so they probably have started to park some of their funds in those sectors," said Takashi Miyazaki, senior strategist at UFJ Partners Asset Management.
He expects the Nikkei to rise as high as 12,000 by May.
Miyazaki also said foreign investors appeared to be boosting their Japanese stock weightings as U.S. stocks seem to have little room to rise.
The Nikkei ended up 0.80 percent at 11,361.51, the highest finish since June 11, 2002.
The broader TOPIX index gained 0.83 percent to reach 1,116.75, extending gains to a fourth straight session.
UFJ Holdings, the smallest of Japan's four biggest bank groups, rose 2.77 percent to 519,000 yen while number two Sumitomo Mitsui Financial Group was up 1.91 percent at 639,000 yen.
Trading companies also posted smart gains, helped by ratings upgrades by Standard & Poor's on Monday.
Marubeni Corp surged 10 percent to 253 yen, the best performer among the Nikkei 225 components, while Itochu Corp racked up gains of 3.37 percent to 399 yen. Technology shares also scored well, although Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. Ltd., said more signs of dollar strength against the yen were needed for these shares to advance further.
Traders said gains in the sector were also held back because investors were waiting for a mid-quarter business update from Intel Corp, the world's largest chip maker, on Thursday.
Electronics conglomerate NEC Corp rose 2.2 percent to 836 while high-tech bellwether Sony Corp eked out a gain of 0.22 percent to 4,560 yen.
Volume remained high, with 1.681 billion shares changing hands on the first section, the highest level since last October, while turnover reached 1.6 trillion yen ($15 billion).
Gainers outnumbered decliners 845 to 573.
AIMING HIGHER
Property shares again drew buyers with Japan's largest property developer Mitsui Fudosan gaining 2.11 percent to 1,258 yen and rival Mitsubishi Estate Co rising 3.47 percent to 1,370 yen.
Miyazaki of UFJ Partners Asset Management said it was too early to buy Japanese stocks based on the assumption that asset deflation was ending.
But he added that with restructuring efforts bearing fruit for some companies, downside risks for the market seem to be minimal.
Akino agreed that a string of strong economic data last week confirmed that the Nikkei would likely be supported above 10,500 and should go higher.
"I don't think it's preposterous to think that the Nikkei will top the 12,000 level in March," he said.
Kenichi Azuma, an equity strategist at Cosmo Securities, said the price-earnings ratio (PER) for Japanese stocks now stands at 27 and was likely to fall to 22 or 23 in the next fiscal year. That compares to a PER of 24 for U.S. stocks.
"Given differences of interest rates, Japanese stocks are very attractive and it's natural that foreigners scoop them up," he said
Traders said foreign and retail investors were active buyers in the market -- a trend that was signaled before the open. Orders placed through 12 foreign brokers before the start of trading showed an intention to buy a net 42.8 million shares, the highest level so far this year.
"Many investors probably don't own many domestic-oriented shares to begin with, so they probably have started to park some of their funds in those sectors," said Takashi Miyazaki, senior strategist at UFJ Partners Asset Management.
He expects the Nikkei to rise as high as 12,000 by May.
Miyazaki also said foreign investors appeared to be boosting their Japanese stock weightings as U.S. stocks seem to have little room to rise.
The Nikkei ended up 0.80 percent at 11,361.51, the highest finish since June 11, 2002.
The broader TOPIX index gained 0.83 percent to reach 1,116.75, extending gains to a fourth straight session.
UFJ Holdings, the smallest of Japan's four biggest bank groups, rose 2.77 percent to 519,000 yen while number two Sumitomo Mitsui Financial Group was up 1.91 percent at 639,000 yen.
Trading companies also posted smart gains, helped by ratings upgrades by Standard & Poor's on Monday.
Marubeni Corp surged 10 percent to 253 yen, the best performer among the Nikkei 225 components, while Itochu Corp racked up gains of 3.37 percent to 399 yen. Technology shares also scored well, although Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. Ltd., said more signs of dollar strength against the yen were needed for these shares to advance further.
Traders said gains in the sector were also held back because investors were waiting for a mid-quarter business update from Intel Corp, the world's largest chip maker, on Thursday.
Electronics conglomerate NEC Corp rose 2.2 percent to 836 while high-tech bellwether Sony Corp eked out a gain of 0.22 percent to 4,560 yen.
Volume remained high, with 1.681 billion shares changing hands on the first section, the highest level since last October, while turnover reached 1.6 trillion yen ($15 billion).
Gainers outnumbered decliners 845 to 573.
AIMING HIGHER
Property shares again drew buyers with Japan's largest property developer Mitsui Fudosan gaining 2.11 percent to 1,258 yen and rival Mitsubishi Estate Co rising 3.47 percent to 1,370 yen.
Miyazaki of UFJ Partners Asset Management said it was too early to buy Japanese stocks based on the assumption that asset deflation was ending.
But he added that with restructuring efforts bearing fruit for some companies, downside risks for the market seem to be minimal.
Akino agreed that a string of strong economic data last week confirmed that the Nikkei would likely be supported above 10,500 and should go higher.
"I don't think it's preposterous to think that the Nikkei will top the 12,000 level in March," he said.
Kenichi Azuma, an equity strategist at Cosmo Securities, said the price-earnings ratio (PER) for Japanese stocks now stands at 27 and was likely to fall to 22 or 23 in the next fiscal year. That compares to a PER of 24 for U.S. stocks.
"Given differences of interest rates, Japanese stocks are very attractive and it's natural that foreigners scoop them up," he said
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