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Stock market in Japan: the latest become the first … Banks and brokers led the market upwards

Japan’s stock market rose again on Wednesday, October 3, against the backdrop of positive news from the banking and brokerage sector. Japanese banks continued their powerful ascent of the grassroots market.

Following the bidding at the Tokyo Stock Exchange on Wednesday, Nikkei 225 index rose 153.11 point, or 0.9%, Close on the benchmark 17199.89 . Broad market Topix index rose 24.22 point, or 1.5%, to 1664,01.

“And the last will be the first …” This simple biblical truth once again proved to be right on the Japanese stock market. Shares of credit institutions and investment companies were among the most actively declining in the past three months against a backdrop of growing mortgage crisis in the USA. However, the change in the perception of the problem had its positive impact on the sector. A number of statements known economists, as well as news from various banks, which plan to overcome the effects of the mortgage crisis in the near future, fundamentally changed the dynamics of changes in equity prices of financial sector in Japan.

However, the sector of investment companies, including brokerage firms , Topix index soared to 5.6%, which was the best result among 33 industry groups index. Shares of broker-investment company Nomura Holdings (NMR) went up by 4%, investment Daiwa Securities Group Inc. soared to 5.8%, but the securities brokerage Nikko Cordial rvanuli up by 14% to limit growth in a single trading day. The reason for such a powerful recovery of brokerage firms has been the news of Citigroup Japan Holdings Ltd., Which intends to buy back 32% stake in Nikko Cordial, which has not yet been located in its ownership. At the same purchase price exceeds 16% of the closing price of shares in the Japanese brokerage firm the day before. The deal will cost Citigroup unit to 530 billion yen. Such news has returned to life expectations of investors regarding the possible acquisition of Japanese brokerage companies by foreign firms.

However, brokers will not be left alone. The financial sector in the broadest sense, continues its recovery. Japanese banks do not stop and show strong growth. Previously, we have repeatedly predicted that changing trend in the market, bank shares will be one of the most attractive because they are reduced to very low values in recent times. Statement by the heads of Citigroup (C) for the return of the Bank’s normal income in the IV quarter, as well as expressions of authoritative economists about the proximity of the completion of the mortgage crisis in the U.S., caused a change in the perception of the shares of financial companies of Japan. in the next few trading sessions, banks are steadily going up, which can also be warning signals to a small technical correction. However, at today’s tender shares Mitsubishi UFJ Financial Group Inc. (MTU) rose 4%, Mizuho Financial Group Inc. (MFG) went up by 4,5%.

steel sector also rose slightly on positive corporate news. Shares of JFE rose by 3.1%. The company intends to raise prices for their products, which enjoys high demand, as rising costs for raw materials. In addition, JFE join forces with Toshiba Corp. for the manufacture of small and medium-sized steam turbines for power plants. Papers Toshiba also went up, adding 2,4%.

Papers Nintendo Co. continued its rise the previous day, went up by 2.7%. Investment bank Goldman raised a recommendation on the paper. But shares of electronics manufacturer Matsushita Electric Industrial Co. (MC) fell by 2.5%. Investors believe that the recent fire at a refinery would have an adverse impact on company earnings, because so far unknown time when the factory is important in the chain of production, will begin its work.

Overall, the auction took place in the domination optimistic mood. The market clearly was quiet on the crisis in the housing and credit sphere of the United States. Investors no longer expect an extremely negative news, although did have to be careful. However, the market is rising without a spike, indicating a very steady trend. Again, it is noteworthy that at risk are shares of Japanese oil companies because oil prices are still unwilling to rise, but rather falling. The banking sector remains attractive, but the likelihood of correction after several days of good growth becomes higher.

By Andrei Kochetkov, an analyst K2Kapital.