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Stocks

Sony hits 2016 high on earnings outlook

TOKYO -- Sony shares jumped 7.3% Wednesday to the highest so far this year after releasing relatively bullish earnings expectations for fiscal 2016.

After giving back some of the gains, Sony ended the day up 6.5% at 3,072 yen. The stock was the most actively traded issue on the Tokyo Stock Exchange first section on Wednesday, with a turnover of 69.7 billion yen ($632 million), far surpassing second-ranked Toyota Motor's 46.4 billion yen.

Sony said Tuesday that it anticipates group operating profit inching up 2% to 300 billion yen in the fiscal year ending March 2017.

The announcement was in line with market expectations, which mostly fell between 250 billion yen and 300 billion yen. But it was seen as encouraging because Toyota and other major manufacturers had come out with warnings for estimates of falling profit, according to Kota Ezawa at Citigroup Global Markets Japan.

Nervous investors have caused wild swings in Sony's stock price lately, but a sense of calm was restored following the earnings outlook.

"Individual and institutional investors, who had taken to the sidelines, came back to grab Sony shares as the negative impact from the quakes was brought into the open" with the release of the projections on Tuesday, said Tsutomu Yamada, market analyst at Kabu.com Securities.

While the video game business is expected to drive Sony's earnings in the current fiscal year, investors have taken notice of recovering profitability in the electronics division, whose products include digital cameras, 4K TVs and image sensors. The major earthquakes that hit southern Japan last month are estimated to have depressed overall profit by 115 billion yen in the current fiscal year. The fresh guidance, however, sees the division's operating profit climbing nearly 30% to about 150 billion yen.

(Nikkei)

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