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Stocks

Market Scramble: 3 magic phrases power Nikkei recovery

70 components achieve all-time highs Friday

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Mandom's hair pomade tripled volume sales in Indonesia last fiscal year.   © Reuters

TOKYO -- Japanese equities finally crossed the 20,000-point threshold on Friday thanks to scores of components that posted record highs that day. And analysts see a chance for further growth centering around three key phrases: big data, price hikes and market development.

The Nikkei Stock Average topped the psychologically significant 20,000-point mark at 9:08 a.m., eventually closing 317 points higher to 20,177. "We are seeing money coming not only from overseas, but also from domestic institutional investors," said a veteran trader at a major Japanese brokerage.

Friday saw around 70 stocks achieving all-time highs, and 275 constituents on the Tokyo Stock Exchange's first section recorded year-to-date highs.

One big winner is the big data industry. After the U.S. Nasdaq market posted a record finish Thursday, underpinned by the performances by Amazon.com and others in the big five tech giants, investors across the Pacific went hunting for Japanese companies involved in cutting-edge technology.

One beneficiary of the renewed attention is Cross Marketing Group, a firm that puts together surveys and also collects and analyzes that data. On Friday, its value of trading ballooned more than six times, and the share price climbed 16% to a new record high.

Furukawa Electric rose 2% based on growing demand for optical fibers. That gain "is colored by stock picking associated with big data," said Tomoichiro Kubota, senior market analyst at Matsui Securities.

Market players are especially excited about the manufacturing opportunities and services that big data could create. And that process could go on for years, making it easy for that sector to draw investor funds, said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute.

Portfolios are also adding companies that are raising prices on products and services. House Food Group, which is selling pricier curry sauce mixes, and Nissin Foods Holdings scored all-time highs. "Companies are being asked if they are sufficiently passing on costs," said Takeshi Kamoshita, fund manager at Asset Management One.

In addition, companies able to develop markets are getting a new shine. Mandom, which produces personal care products, generates 20% of group sales in Indonesia. The company's hair styling products for men enjoy a 70% market share there, and demand is still growing. Pomade sales tripled by volume in the fiscal year ended this March, for example. Daiwa Securities raised its investment ratings for Mandom in May.

That same month, Sakata Inx realized its highest-ever stock reading since going public in 1961. The long-established printing ink company is currently taking its business global.

Friday's trading also was marked by funds pouring into large-cap bargain stocks, meaning investors are not actively returning to financial and auto components, said Kosei Mikuni, chief portfolio manager at Nissay Asset Management. Few analysts believe the current gains are sustainable, but the three themes could put the Nikkei average within striking distance of 20,868, the 18-year peak logged in June 2015. 

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