Last year's worst Nikkei stocks are now best performers

Tokyo

WHILE electric vehicles and cryptocurrencies still grab the headlines, the charge in Japan's Nikkei 225 Stock Average back to its bubble-era highs has been led by old-world technology such as watches and copy machines.

The top performer on the blue-chip gauge so far in 2021 has been office-equipment maker Konica Minolta, which is up 46 per cent. Last year, the stock was one of the Nikkei's worst, with a 45 per cent drop as the shift towards paperless offices got a lift from the Covid-19 work-from-home trend.

Similar reversals from bottom ten to top ten have been seen in camera maker Nikon and Citizen Watch.

"Japan's 'most unloved' and the 'normalisation' names are the ones with most momentum right now," Tim Morse, a director at Asymmetric Advisors, wrote in a note. Many "old Japan" names had dropped to all-time low book valuations even though they should see profits rebound after the pandemic fades, he said.

Morgan Stanley MUFG upgraded Konica Minolta to "equalweight" Wednesday after cutting the stock to "underweight" last May. The broker also lifted its view on Japan's precision instrument sector to "in line" from "cautious" and raised its price targets for Konica Minolta and peers including Ricoh, another company whose stock has seen a big rebound this year.

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"Better-than-expected earnings improvements achieved by the companies have heightened our conviction in profit recovery, even if print volumes do not return to pre-Covid levels," analyst Masahiro Ono wrote.

Along with pre-Internet era tech, oil is also back in favour. Energy explorer Inpex has surged 42 per cent this year, ranking it No 4 on the Nikkei and paring its 51 per cent plunge in 2020.

Still, despite the global focus on an economic rebound and the cyclical stocks that may benefit, that doesn't mean modern-world names are out of favour. Cryptocurrency hype has driven Monex Group up more than 150 per cent in 2021, ranking it No 2 on the broader Topix stock measure. The trend also accounts for the 200-plus per cent gains in this year's top stocks on the Tokyo Stock Exchange Second Section Index (Remixpoint) and Jasdaq (Caica). BLOOMBERG