The Nikkei share average edged higher on Thursday as buying from foreign investors attracted by cheap valuations offset growing worries over a slowing US economy. Although a drop in US shares to three-month lows and a rise in the yen to a one-month peak against the dollar on Wednesday weighed on the market, purchases from Japanese institutional investors who had held off on buying from the start of the new financial year in April also helped curb declines.
"I think a lot of market players feel that the market won't fall much and is resilient," said Seiichiro Iwasawa, an analyst at Nomura Securities. The benchmark Nikkei ended up 0.2 percent at 9,467.15. It earlier fell as low as 9,383, but held above key technical support at the March 29 intraday low of 9,317. The broader Topix shed 0.2 percent to 812.95.
Many market players see limited downside in Japanese shares as valuations remain attractive with about 65 percent of stocks listed on the Tokyo exchange's main board trading at or below book value. The Nikkei as a whole is trading around book value, compared with the US S&P 500 at more than two times book value, according to Thomson Reuters Starmine.
Still, analysts said the Nikkei would likely stay rangebound for the next few days as investors cautiously monitor Wall Street stocks and developments in the US economy. Many market players also said expectations that the Bank of Japan would buy stock exchange-traded funds (ETFs) should there be sharp falls in share prices were limiting any incentive to sell aggressively.
The central bank has made about 300 billion yen's worth of such purchases since December, and has stepped up buying since the earthquake in March, as part of its asset purchase programme that includes buying of up to 900 billion yen of ETFs. Nintendo, which fell sharply on Wednesday after its latest games console disappointed investors, extended losses to a new five-year low, falling 4.6 percent to 16,160 yen after UBS Securities cut its rating to "neutral" from "buy".
Sony Corp closed down 0.6 percent at 2,026 yen after dropping below 2,000 yen for the first time since March 2009, after the company said subsidiary Sony Marketing's system had been hacked on Wednesday and shopping coupons worth 280,000 yen that users had accumulated were stolen. Separately, film division Sony Pictures Entertainment said the number of people affected by a recent hacker attack on its database could reach 37,500.
The retailers subindex gained 0.5 percent, outperforming the overall market as investors picked up retailers with solid earnings outlooks including K's Holdings and Yamada Denki. K's Holdings, a discount retailer of consumer electronics, ended up 2.6 percent at 3,325 yen after touching a life-time high of 3,330 in heavy trading. Rival Yamada Denki jumped 1.8 percent to 6,880 yen. Volume was moderate, with 1.86 billion shares changing hands on the Tokyo stock exchange's main board, in line with last week's daily average volume of 1.88 billion shares. Declining shares outweighed advancing shares by 805 to 647.