Tokyo: Shares end almost flat just below 3-month high as rally loses steam
[TOKYO] Japanese shares closed nearly flat on Wednesday, ending just below a three-month high hit earlier this week, as investors paused to take stock of the market that rose on hopes of a swift recovery from a coronavirus-led downturn.
The Nikkei share average ended up 0.15 per cent at 23,124.95, while the broader Topix lost 0.23 per cent to 1,624.71.
"The market has been recovering but many people are concerned about the outlook. Given the current stretched valuations, we could see a correction in the near term," said Masato Futoi, deputy general manager of institutional sales at Tokai Tokyo Securities.
With the Topix trading at 16 times expected earnings over the next 12 months, the highest level in seven years, some Japanese players were taking profits ahead of the US Federal Reserve's policy meeting later in the day.
Takara Bio rose 17.5 per cent, by daily limit, to a seven-year high after the Japanese biotechnology firm said it has developed a method to speed up PCR tests for Covid-19.
The parent company Takara Holdings was the best performer on the Nikkei, with gains of 9.9 per cent.
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Growth-oriented shares, which have high valuations because of strong expectations, are making a comeback, with the Topix Growth index rising 0.2 per cent. Topix value shed 0.7 per cent.
Among growth shares, Shin-Etsu Chemical rose 2.2 per cent, Astellas Pharma gained 1.9 per cent and Recruit Holdings added 1.7 per cent, while Sony rose 1.3 per cent.
Shares in the Tokyo Stock Exchange's Mothers startup market also outperformed, with its index rising 1.5 per cent after hitting a one-and-a-half year high.
On the other hand, many of value shares - those with relatively cheap valuations - underperformed following stellar gains in the past couple of weeks.
Constructors fell 1.7 per cent with Shimizu dropping 4.4 per cent, Taisei losing 3.8 per cent and Obayashi shedding 4.9 per cent.
Steelmakers dropped 2 per cent, while insurance companies lost 1.5 per cent.
REUTERS
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