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Stocks

IT-aided management innovation seen as next buying theme

TOKYO -- Investors are turning to companies that use information technology for the purpose of managerial innovation.

     Shares of industrial machinery developer Fanuc and automated devices producer Keyence advanced 1% Wednesday, as did Kawasaki Heavy Industries, which is working on medical robot development.

     "These days, long-term investors in the U.S. are inquiring about machinery stocks," Tomohiko Sano at JPMorgan Securities Japan said.

     Indexes also reveal a growing interest in machinery shares. An investor sentiment barometer developed by Mizuho Securities and Absolute Strategy Research shows machinery shares as oversold from the start of the year until recently, when they rebounded. "Bearishness is tapering off," Mizuho's Masatoshi Kikuchi said.

     Interest is growing in the "Internet of Things," which connects equipment and robots with the Internet to enhance productivity. The growth strategy adopted by the Japanese government Tuesday also called for an IT-supported productivity revolution. Hopes are growing that demand for factory automation machinery will increase.

     Businesses are increasingly seeking IT-aided managerial innovation.

     After embracing corporate governance, companies will aggressively pursue IT next, a senior official at the Tokyo Stock Exchange said. The bourse, with the Ministry of Economy, Trade and Industry, identified 18 companies with competitive IT-supported management strategies. The list includes Nissan Motor and Komatsu, which overhauled their business models using IT.

     These companies are cheered by investors who are hopeful that IT will enhance management. An index tracking the average share price of the 17 out of these 18 companies that were publicly traded as of the start of 2005 surged 98% from then through Tuesday, beating a 77% rise for the broader Nikkei Stock Average.

     Sekisui House, one of the 18 companies on the list, has sought to develop "smart homes," where sensors detect dwellers' health and adjust the in-home environment. The company, which sees record profit for the year ending January 2016, plans to take renovation orders through Amazon Japan.

     Komatsu also will improve production using information and communications technology. It will not only grasp the utilization status of customers' construction machinery but also consolidate utilization data of its own machinery tools and robots. Komatsu says this will enhance productivity and help slash manufacturing costs by 15 billion yen ($121 million) a year.

     Japan's investment in information and communications technology is one-third of that in the U.S. and half of the level in Germany, according to Cabinet Office data. Studies also show a relationship between IT investment and productivity.

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