Fast Retailing shares seen facing pressure from Nikkei weightings review

By Noriyuki Hirata TOKYO, April 24 (Reuters) - Shares in Uniqlo brand owner Fast Retailing , the largest component of Japan's Nikkei share average , may face selling pressure from index tracking funds as further weighting caps are applied, according to analysts. Nikkei introduced a 12% cap on constituents' weight in the index last October, which it will reduce to 11% this October and 10% next year. Fast Retailing's weighting was 11.7% on April 14, when it hit a more than two-year high, meaning it is the top candidate for a reduction that would likely trigger selling by index-tracking funds. A Fast Retailing spokesperson said the company respects the rules of the index publisher and has no further comments. If Fast Retailing's weight is reduced to 11%, there will be a sell-off of about 243.6 billion yen ($1.8 billion) worth of shares based on the close of April 14, said Takehiko Masuzawa, head of trading at Phillip Securities Japan. The weightings review, which will be calculated against stock prices at the end of July, is in response to criticism of the index's market breadth, as a few big stocks set the Nikkei's direction. April 14 offered an example, where strong earnings at Fast Retailing lifted the stock price and its rally added 261 points, or nearly three quarters, of the Nikkei's total 333.5 point advance. Fast Retailing shares were last up 0.03% on Monday.
($1 = 133.7300 yen) (Translation and additional reporting by Junko Fujita in Tokyo; Editing by Lincoln Feast.)