Can the Nikkei Keep Up Its Momentum?

Japan's Nikkei (NIKKEIINDICES: ^NI225) stock index has been an investor's dream in 2013, but the Nikkei hit the skids this past week. The index lost more than 3.7% over the past five days, its first weekly loss in three weeks and one of its worst weeklong stretches year to date.

The Japanese economy's still picking up speed after emerging from the shadow of more than two decades of stagnation. Japanese stocks sure have performed well, but can the good times continue for the Nikkei and investors as Prime Minister Shinzo Abe's stimulus efforts gain momentum? Let's check out the latest from across the Pacific.

Can Japan's exports keep up?
One red flag has risen as Japan's exports have fallen off the pace recently. The country's exports rose by 11.5% in September, far short of the 15.6% estimated median projection for the mark. With the yen weakening, exports mean more for companies looking to bolster their bottom lines, and it'll be paramount for top firms -- and stocks -- to capitalize on the yen's fall by ramping up exports in future months.

Which market's to blame for the below-average result? Look to Asia: Japan's exports to other Asian nations only grew 8.2%, more than 5 percentage points less than August's result. However, considering that China's own exports have struggled recently as global demand for Chinese goods has waned, this problem may be more the result of world economies struggling to find solid footing in the recovery rather than the failure of Japan's top companies to deliver overseas.

At least one company is looking internationally to strike it rich in the final months of 2013. Sony (SONY 1.10%) investors are facing crunch time as one of Japan's leading electronics firms prepares to launch its PlayStation 4 entertainment and gaming console in November. It's uncertain just how many PS4 consoles have been pre-ordered so far in the U.S., but the American market will be big for Sony as it looks to top rival Microsoft (MSFT 0.37%) in the race for next-generation console dominance.

Sony's waxed and waned against Microsoft in the current generation, although the company's PlayStation 3 finally topped Microsoft's Xbox 360 in U.S. sales in September. That broke a 32-month run of the Xbox 360 on top, a mark that shows just how well Microsoft's competed against its Japanese rival in this space.

Should Sony investors be concerned going forward? Not so, according to research firm IDC. IDC projects Sony's PS4 to outsell Microsoft's next-generation Xbox One this holiday season in the U.S., a good starting point for Sony in the race. Fortunately for investors concerned about gaming's recent slide, IDC also expects console sales this year to top 2012's mark. It's likely that 2014 could see an even bigger boost as consumers embrace the next generation of game and entertainment consoles, helping both Sony and Microsoft rebound from this industry's recent sluggishness.

One Japanese firm that's not looking so good here? It's Nintendo (NTDOY -0.33%), which has struggled to partner its Wii U gaming console with skittish third-party video game developers. While the Wii U's sales rocketed higher by 200% in September after a $50 price cut to the console, it's likely Nintendo's device will be overshadowed by Sony and Microsoft's offerings this holiday season. Nintendo's stock has underperformed the Nikkei and many of its Japanese peers by gaining less than 8% year to date, and if Sony and Microsoft hit a home run with their next-generation console launches, Nintendo investors could be in for hard times in the near future.