STOCK FOCUS: Analysts Expect Stocks To Rise Further

TOKYO (Nikkei)--Japanese stock prices will continue to rise until at least the end of this year, according to Junya Naruse, chief strategist at Daiwa Securities Co.

Naruse said investors around the world will continue to sink money into stocks for some time amid the global economic recovery and monetary easing in developed countries.

There is little concern that the U.S. will tighten its monetary policy in the near future because the pace of recovery there is mild, according to Naruse. This is also a positive factor for stock prices.

"Among the major stock markets, Japan's has the most room to rise," he said.

One reason is that Japanese corporate earnings will improve as the weakening of the yen against the dollar takes hold amid a pick-up in the U.S. economy.

Another reason is that there are strong expectations for aggressive monetary easing by the Bank of Japan and for the growth strategies of Prime Minister Shinzo Abe's government.

Naruse predicts the Nikkei Stock Average will rise to 12,500 by the end of this month, at the earliest, and then to 13,000 by the end of this year.

Seiji Katsurahata, senior economist at Dai-ichi Life Research Institute Inc., says the climb in U.S. stock prices to an all-time high is largely attributable to U.S. Federal Reserve Chairman Ben Bernanke, who made it clear in congressional testimony last week that the central bank will continue its monetary easing.

Katsurahata also said Bernanke's comment made U.S. investors more confident about buying, because there had been speculation in the market that monetary easing would end soon.

"Japanese stocks will also draw further buying from investors," said Katsurahata. "Japanese stocks have been rising, but they are lagging U.S. stocks."

Next week, Japan is expected to express its intention to join negotiations for the Trans-Pacific Partnership.

Such a move "will show to investors Japan's steady progress toward reform," he said. "If an exit strategy from the monetary easing becomes visible in the U.S., U.S. and Japanese stocks may retreat."

(The Nikkei, March 6 evening edition)

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