Tokyo shares close lower on profit-taking ahead of MSCI, weekend

TOKYO (AFX-ASIA) - Share prices closed lower after a late wave of profit-taking trimmed back earlier gains ahead of the weekend and the announcement tomorrow of the rebalancing of free float stocks by Morgan Stanley Capital International, dealers said.

	    However, interest in technology issues in tandem with the rebound of U.S. high-techs on NASDAQ supported the downside, they said.

	    The Nikkei 225 index closed down 32.90 points at its low for the day of 13,877.77, off a high of 14,067.73. Trading volume was 818 mln shares.

	    The Topix index was down 5.37 points at 1,371.57, while the Nikkei 300 was down 1.62 points at 275.01.

	    There were 594 risers and 737 decliners, with 130 stocks unchanged.

	    The Nikkei June futures contract was down 100 points at 13,900 on the Osaka exchange and at the same level on the SGX.

	    Shinko Securities market analyst Yutaka Miura said that while the afternoon session was capped by caution ahead of the MSCI announcement, the move is "not likely to have material impact on actual price movements".

	    "Many investors already know the likely content of the announcement, including which stocks will be included and whose weighting will be reduced," he said.

	    Miura said international investors are also unlikely to rush to adjust their portfolios immediately after the announcement, as the MSCI will implement the actual adjustment to its global index over the next year.

	    "Still, some investors worry about possible surprises in the announcement," he said.

	    Dealers said underlying uncertainty over the sustainability of U.S. high-techs on NASDAQ also weighed on the top-side.

	    "The NASDAQ index has been top-heavy compared with the extent of the rebound of the DJIA index, which means that investors there have not turned so bullish," Miura said.

	    "Due to such a view, local high-techs have also been top-heavy, although they see some bargain-hunting on any large falls."

	    Rohm rose 260 yen to 23,540, and Kyocera gained 190 to 11,870 and Advantest rose 60 to 14,050, while Tokyo Electron was down 190 at 8,650 after results and after forecasting revenue and earnings to fall in the current fiscal year.

	    Dealers also said that although the strong concern over the earnings performance of broader Japanese firms receded to some extent, investors are now hostage to any negative surprises related to individual stocks.

	    For instance, NTT fell, after failing to present a clear target for its job cuts at its earnings announcement yesterday, although local media have reported that the company would decide on 60,000 job cuts.

	    "In the next week, some 600 firms, equivalent to some 40 pct of the listed companies, will report earnings results and investors will try to screen each firm more stringently," Miura said.

	    Mitsubishi Motors fell 2 yen to 395 after reporting a record net loss earlier in the session and forecasting a modest turnaround in the year to March 2002.

	    Shinko Securities senior analyst Shinji Kitayama said that whether the company can control rising sales incentives successfully will be the key in assessing the feasibility of the company's business plan.

	    However, Mitsubishi Motors project leader in the Finance and Public Relations department Toshi Gima said average sales incentives rose some 10 pct to around 2,000 usd per unit in the year to March 2001 from a year earlier.

	    Gima attributed this to a jump in incentives for the Challenger sport utility vehicle whose product cycle is coming closer to an end.

	    Nissan rose 19 yen to 179 after results yesterday, with Honda declining 50 to 5,300.

	    Isuzu Motors ended up 16 at 273 after Honda announced a plan to begin purchases of 1.7-litre diesel engines made at Isuzu Motor's Polish plant for use in its Civic passenger car model to be marketed in Europe.

	    Shinko's Miura said this breaking news encouraged investors to buy into "laggards among the automotive sector," after having played around with industry leaders such as Nissan and Toyota.

	    "This is typical inter-sector rotation," he said.

	    Toyota was down 50 at 4,190.

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