ENG: Nikkei climbs to 5-week high, exporters flooded with buy orders
Japan's 225-issue Nikkei Stock Average rose 3.84 percent to hit a five-week high on Thursday as the yen retreated against other major currencies spurring a flurry of purchasing in export-related shares.
Overall there was a positive market response to Japan's central bank's (BOJ) fiscal policy revealed Tuesday and ongoing communication between Prime Minister Yukio Hatoyama and Bank of Japan Governor Masaaki Shirakawa, who vowed in talks on Wednesday to step up cooperation in their effort to pull the nation out of deflation. The proactive stance by the government and the BOJ lifted investor sentiment on Thursday.
Japan's key benchmark Nikkei added 368.73 points to 9,977.67 from Wednesday, its highest close in five weeks. The broader Topixindex of all First Section issues on the Tokyo Stock Exchange climbed 29.30 points, or 3.41 percent, to 888.04.
Hatoyama's meeting with the BOJ Wednesday came a day after the central bank announced a decision to further ease monetary policy by offering super-low interest loans, amid government pressure to respond to a surging yen and falling prices. Hatoyama said after the talks that he and Shirakawa pledged to "take action quickly while sharing the notion that the government and the BOJ need to pull Japan out of deflation."
In Tuesday's emergency meeting the central bank voted unanimously to offer about 10 trillion yen (114 billion U.S. dollars) in short-term loans to commercial banks to boost liquidity. It also maintained its key interest rate at a super-low0.1 percent.
Banking issues advanced on new policy initiatives, although there's still concern in the market about further equity financing to raise capital -- diluting per-share valuation.
Top Bank Mitsubishi UFG Financial Group Inc. gained on losses made Wednesday, climbing 2.26 percent to 497 yen and Sumitomo Mitsui Financial Group Inc. added 2.82 percent to 2,910 yen. Mizuho financial Group Inc. gained 1.20 percent to close at 168 yen.
The yen extended its losses against the dollar, lifting exporters, after Vice Finance Minister Rintaro Tamaki met with U.S. Treasury officials this week in Washington, spurring speculation the two nations are discussing the yen's strength with bilateral intervention in mind.
Potential policy towards quantitative easing also acted as a regulator on the yen and investor sentiment towards Japan purchasing is lifting, as anti-deflation measures look likely to be enacted.
The dollar gained 0.5 percent to 87.77 yen and investors concerns about profit loss when exporter yields are repatriated are gradually recovering as the yen continues its retreat.
"The yen's fall against the dollar has set off short-covering," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
The government is currently compiling additional stimulus measures totaling at least 2.7 trillion yen to bolster employment and growth, which market insiders contend will encourage circumspect investors to return to purchasing in Japan in the short-term, as there are still gains to be made before the year-end, as the market is still rebounding following the yen's recent surge to a 14-year high, which led to rampant overselling.
As news of a potential collaboration with Peugeot came to light, shares in Mitsubishi Motors Corp. surged 12.60 percent to 134 yen -- one of the biggest advancers on the market Thursday.
Mazda Motor Corp. leapt 6.70 percent to 207 yen and Suzuki Motor Corp. also jumped 4.47 percent to 2,220. Honda Motor Co. Ltd. gained 4.19 percent to 2,985 and Isuzu Motors Ltd. advanced 4.81 percent to 174 yen at the 3 p.m. bell.
Tech-shares gained as the yen weakened and buy orders were given, according to brokers. Sanyo Electric Co. Ltd. rose 1.91 percent to 161 yen and Sharp Corp. gained 3.98 percent to 1,070 yen. Panasonic Corp. climbed 5.80 percent to 1,223 yen and rival Pioneer parried with a 5.93 percent rise to 268 yen. Sony Corp. surged 6.00 percent to 2,475 percent -- a notable gain in trade on Thursday.
Japan's ailing carrier Japan Airlines Corp. ended trade flat Thursday at 92 yen despite both Delta Airlines and American Airlines saying Thursday their billion-dollar offers are still on the table.
JAL desperately needs an injection of capital from a third party, as well as state-backed support, to keep the airline from liquidation, as it continues the troublesome task of resolving pension issues with current and former employees, who have previously enjoyed very generous packages. JAL have also slashed a number of international and domestic routes as well as reducing the number of planes in their fleet in a bid to stem the carrier's hemorrhaging financial wound.
"The offer was stated in dollars," he told reporters at a Tokyo hotel, while acknowledging that the yen has strengthened recently. "That's not enough to change our offer."
Delta Airlines' offer includes its SkyTeam partners.
Meanwhile, American Airlines said Thursday it will provide an incremental financial package totaling over 1.8 billion U.S. dollars to JAL, together with American's global oneworld alliance members and TPG Inc.
"The total incremental financial support from American Airlines, oneworld and TPG is in excess of 1.8 billion U.S. dollars and far exceeds any other available proposition," said a spokesperson for the company on Thursday.
Notable declines were made today by Uniqlo Operator, Fast Retailing Co. Ltd., who lost 1.8 percent to 16,030 yen, following worse-than-expected sales data.
Taiheiyo Cement Corp. also moved into negative territory on Thursday, shedding 0.98 percent to 101 yen at the 3 p.m. bell.
In an active day of trading, volume increased to 2,486.56 million shares from 2,164.20 million on Wednesday.
Advancing shares outnumbered declining ones by 1,531 to 107.
