Nikkei briefly tops 16,000 on real estate stocks

[HenryTo]

Real estate stocks in Japan going crazy tonight - momentum is too strong on the upside right now:
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Nikkei briefly tops 16,000 on real estate stocks
Tue Dec 20, 2005 11:47 PM ET

TOKYO, Dec 21 (Reuters) - Japan's Nikkei average briefly topped 16,000 for the first time in five years on Wednesday as property stocks such as Mitsubishi Estate Co. Ltd. (8802.T: Quote, Profile, Research) led the market higher for a second straight session.

Buying was inspired by a report of a potential Tokyo deal worth some $3.5 billion the day before, which underscored the improved outlook for Japan's real estate market after more than a decade of falling prices. The Nikkei was up 1.92 percent or 300.89 points at 15,942.15 as of 0435 GMT after rising as high as 16,006.96 earlier in the afternoon. It broke through the 16,000 level for the first time since October 2000.

The broader TOPIX index was up 1.32 percent at 1,635.37. It earlier rose as high as 1,640.33, its highest since May 2000.

Real estate developer Mori Trust Co. said on Tuesday it was in talks with American International Group Inc. (AIG.N: Quote, Profile, Research) to sell a redevelopment property in central Tokyo.

"The news was shocking as it forced us reset our views on the value of real estate assets here," said Tsuyoshi Nomaguchi, strategist at Daiwa Securities.

"A new round of buying started yesterday with shares of companies which hold large real estate assets, such as railway companies. Now buying is spreading to other sectors, like warehouses," he said.

Mitsubishi Estate, Japan's biggest real estate company, soared 12.1 percent to 2,455 yen after hitting a high of 2,570 yen, its best level since 1990, around the peak of Japan's asset price bubble.

NTT Urban Development Corp. (8933.T: Quote, Profile, Research) rose by its daily limit of 100,000 yen, or 15.1 percent, to 763,000 yen. Sankei Building Co. Ltd. (8809.T: Quote, Profile, Research) also rose by its daily 100 yen limit, or 10.6 percent, to 1,048 yen. The two firms have real estate assets in the central Tokyo area.

The real estate sector subindex jumped 6.3 percent, the biggest-gaining sector on the Tokyo bourse's first section, followed by a 3.4 percent rise in the warehouse sector .

Lagging technology stocks also attracted investors, with chip equipment maker Advantest Corp. (6857.T: Quote, Profile, Research) rising 2.3 percent to 11,230 yen.

A rebound in the dollar against the yen gave them a cue for buying although concerns remained after a fall in U.S. technology stocks and industry data the previous day showing deterioration in the North American semiconductor equipment market.