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The 28 Japanese ADRs listed on the Nasdaq and NYSE returned 4.2% on average last week -- not bad at all.

Renewed strength in the yen following the G7 meeting and ahead of the Bank of Japan rate decision meeting this Wednesday helped account for about 1.5% of the upside.

The Nikkei 225 is currently trading above 17,900 (highest level since May '00), but has not been able to eclipse the psychologically important 18,000 yet. It reached 17,974 intra-day yesterday, but there has understandably been some profit-taking and yet rather surprisingly enough support to prevent mass profit-taking, as is often experienced with rallies in Japan.

Slight weakness intra-day today is attributed to U.S. markets being closed and thus a lack of new information to trade on.

Nikkei225-1yr-chart-02-19-07

Last week was a good one for Japanese stocks including ADRs and funds listed on U.S. exchanges. Below is a list of the best and worst five performers, as well as a chart of all 28 ADRs.

Best weekly returns:

    1. Nomura (NYSE:NMR) -- 11.2%
    2. Trend Micro (TMIC) -- 7.5%
    3. Sony (NYSE:SNE) -- 7.0%
    4. Wacoal (OTCQX:WACLY) -- 6.1%
    5. Mitsubishi UFJ (NYSE:MTU) -- 5.9%

Worst weekly returns:

    1. Honda (NYSE:HMC) -- (1.3%)
    2. NTT (NYSE:NTT) -- (1.2%)
    3. Orix (NYSE:IX) -- 1.0%
    4. FUJIFILM (FUJI) -- 1.1%
    5. Makita (OTCPK:MKTAY) -- 1.8%

Click to enlarge chart

Weekly-Japan-ADR-Feb16end

As you can see, even among the worst performers there were only two in the red and then it was all green.

Investors are really warming up to Nomura (NMR), as its M&A growth strategy seems to be assuaging concerns over its reliance on domestic trading. It recently closed its $1.2 billion acquisition of Instinet and made a handsome quick paper gain from its 15.5% equity investment (valued at $888m) in Fortress (NYSE:FIG).

Trend Micro (TMIC) was helped late in the week by a revision of its Q4 financials.

Sony (SNE) has been hot in 2007 despite all the news of Nintendo (OTCPK:NTDOY) kicking its butt in new console sales. Barron's carried a bullish piece on Sony this past weekend, which could bring more upside when trading resumes tomorrow. See chart below.

Sony-SNE-1yr-chart-02-16-07

Wacoal (OTCQX:WACLY) was up perhaps for obvious reasons given it was Valentine's Day last week. Here's a little background from an article in Time.

Lastly, Mitsubishi UFJ (MTU) and other bank stocks have done well recently following a Merrill Lynch upgrade and in anticipation of a BoJ rate hike, which would help their lending margins.

Disclosure: The author does not own shares of any companies mentioned in this article, but does own shares of IIJ and NIS Group, which are listed in the chart.

Source: Japan: Best and Worst Performing ADRs Last Week