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Tokyo shares slip off 14-month high, Hitachi soars

Japan’s Nikkei share average ended lower on Thursday as profit-taking set in after a recent rally to 14-month highs, while technology conglomerate Hitachi spiked higher on its business portfolio restructuring.

The Nikkei share average ended 0.29 per cent weaker at 23,864.85, slipping further from Tuesday’s 14-month peak of 14,091.12, while the broader Topix closed 0.13 per cent lower at 1,736.11.

Markets showed no reaction to the Bank of Japan’s decision to keep its monetary policy on hold. The central bank, as expected, maintained its upbeat view on the economy, suggesting policymakers are in no hurry to boost stimulus even as global risks threaten a fragile recovery.

BOJ also gave out some details of a scheme, first announced in April, to lend ETFs it is holding.

Many investors were eager to take profits at current levels following gains of almost 20 per cent since a bottom in August on hopes of a cyclical recovery in the global economy, and lately, on relief over a first phase Sino-US trade deal.

Data showed foreign investors bought 627.8 billion yen ($5.78 billion) of cash Japanese stocks and futures last week, their largest buying in eight weeks, data from JPX showed.

“The Nikkei is now trading at 16 times its 12-month forward earnings so it is now on the expensive side for a normal time even though you wouldn’t call it a bubble,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

Market players were closely monitoring developments surrounding the impeachment of US President Donald Trump although few expect it to roil markets.

Cyclical shares such as securities brokerages and shippers were among the main drags, falling 1.8 per cent and 1 per cent, respectively.

On the other hand, Hitachi jumped 4.6 per cent to a nearly two-year high as investors welcomed its business restructuring drive.

The company said it would sell its listed chemicals unit, Hitachi Chemical as well as its diagnostic imaging business in deals totalling 673 billion yen ($6.2 billion).

Hitachi Chemical rose 11.8 per cent, while Showa Denko, which bought the chemical firm, dropped 2.7 per cent.

The buyer of Hitachi’s imaging business, Fujifilm Holdings , ticked up 2.1 per cent.

Isuzu Motors dropped 3.7 per cent after it announced a deal to buy UD Trucks from Sweden’s Volvo AB. The deal was announced after the market close on Wednesday.

Some semi-conductor related shares gained following a jump in Micron Technologies after the bell on Wednesday.

The US chipmaker said it expected a recovery in 2020 after a “cyclical bottom” in the second quarter, and also that it had received all requested licences to supply some products to its largest customer, China’s Huawei.

It helped to lift Advantest by 2.6 per cent, Sumco 2.4 per cent and Disco ended 1.4 per cent firmer.

Source: Economic Times