Goldman's Japan call pays off

BACK in July Goldman Sachs said

To underline their case, strategist Kathy Matsui and her team forecast that the broad-based Topix index would hit 1200 points in six to 12 months.

A couple of months down the track and that call looks to have been a good one, at least so far. A string of slightly more positive indicators have suggested that Japanese growth may be returning and foreign funds have driven the market up by about a third since April.

Today was another reasonably positive session. Shedding early losses, the Japanese market headed into positive territory amid hopes that revised growth data due later this week will lure yet more buyers.

The Nikkei 225 Average rose 32.99 to 10,683.76. Meanwhile the Topix index firmed 1.02 points to 1027.23. If Matsui and Goldman are right there are further gains to come, with upside of 17%.

The near-term focus remains on Wednesday's fresh look at gross domestic product growth data for the second quarter. The preliminary take, issued midway through last month, pointed to an expansion of 0.6%, better than many had forecast.

Brokers added that part of today's equity market strength came as the Bank of Japan appeared - once again - to have clobbered the yen in the foreign exchange market to prevent it rising against the dollar. The BoJ was similarly active last week.

Against that backdrop, banking counters made the running, turning the tide on recent profit-taking. Sumitomo Mitsui Financial gained 19,000 yen, or 4.5%, to 441,000 yen; Mizuho Financial was 4000 yen, or 2.5%, betterat 168,000 yen; and UFJ advanced 9000 yen, or 2.6%, to 358,000 yen.

Tech stocks also had a firmer tone on hopes for a continued pick-up in demand. Advantest was 60 yen, or 0.8%, higher at 8310 yen; NEC climbed eight yen, or 0.9%, to 810 yen; and Tokyo Electron gained 110 yen, or 1.3%, to 115,000 yen.

Hong Kong's new superstock, Vanda Systems and Communications, took a tumble after controlling shareholders Hutchison Whampoa and DBS Group placed out shares late on Friday. The computer systems company, which soared last week when Hutch assumed control, fell 14 cents, or 10.9%, to HK$1.15. The company said the placing has restored its free float to 25%.

Minnow lender International Bank of Asia was suspended at Friday's close of HK$3.45 pending news of a possible takeover offer. Emerging markets powerhouse Standard Chartered was touted by some as a possible suitor.

The wider market was softer following Friday's dip on Wall Street. With global bank HSBC off 50 cents, or 0.5%, at HK$101 and Cathay Pacific Airways 20 cents, or

1.5%, down at HK$13.30, the Hang Seng index slipped 55.79 points to 11,114.82, off 0.5%.

Australian takeover favourite winemaker Southcorp gave up four cents, or 1.3%, to A$3.19 after its chief, John Ballard, said controlling shareholders were simply not interested in entertaining bids. The All Ordinaries gained 13.9 points, or 0.43%, to 3227.7.