Japanese Stockmarket Enjoys a Suga Rush As PM Steps Down

The Japanese stock market has hit a 30-year high following the resignation of prime minister Yoshihide Suga.

Japanese stocks have hit a 30-year high following the resignation of prime minister Yoshihide Suga. Suga, who has only been in office for a year, had become widely unpopular as his government failed to get on top of a surge in Covid-19 infections. A slow vaccine rollout and the controversial decision to go ahead with hosting the Olympics despite the pandemic also sapped his support. He will step down before a general election scheduled for later this year. 

Japan’s Topix index reacted to the news by hitting its highest level since April 1991, says Bloomberg. Investors had once had high hopes for Suga, who vowed to accelerate Japan’s digital shift (see also page 28). In February this year the Nikkei 225 index hit the symbolic 30,000-level for the first time since 1990. Yet it fell back as Covid-19 came to dominate his premiership: “Suga had created an atmosphere of uncertainty… there was a perception that Japan was ‘in a mess’”, says Richard Kaye of Comgest Asset Management Japan.  The Topix has gained 6.5% during the past month alone.

In most countries investors dislike the uncertainty of an upcoming election, says Takeshi Kawasaki for Nikkei Asia. Not in Japan. “Looking at the ten early elections held since 1990, stocks rose nearly every time between the day of the lower house being dissolved and the election date”. 

What seems to happen is that headlines about Japanese politics grab the attention of foreign money managers. They decide they like what they see and buy. “Typically at the mercy of trends in US equities” thanks to Wall Street’s tendency to set the tone for world markets, Japanese stocks are likely to go their own way over the coming months.

By: Alex Rankine

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Critics:

The Tokyo Stock Exchange (東京証券取引所, とうきょうしょうけんとりひきじょ), abbreviated as Tosho (東証) or TSE/TYO, is a stock exchange located in Tokyo, Japan. It is the third largest stock exchange in the world by aggregate market capitalization of its listed companies, and the largest in Asia. It had 2,292 listed companies with a combined market capitalization of US$5.67 trillion as of February 2019.

The exchange is owned by the Japan Exchange Group (JPX), a holding company that it also lists (TYO: 8697). JPX was formed from its merger with the Osaka Exchange; the merger process begins in July 2012, when said merger was approved by the Japan Fair Trade Commission.[2] JPX itself was launched on January 1, 2013.

The TSE is incorporated as a kabushiki gaisha with nine directors, four auditors and eight executive officers. Its headquarters are located at 2-1 NihonbashiKabutochō, Chūō, Tokyo which is the largest financial district in Japan. Its operating hours are from 8:00 to 11:30 a.m., and from 12:30 to 5:00 p.m. From April 24, 2006, the afternoon trading session started at its usual time of 12:30 p.m..

Stocks listed on the TSE are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers section for high-growth startup companies, and the TOKYO PRO Market section for more flexible alternative investment. As of October 31, 2010, there are 1,675 First Section companies, 437 Second Section companies and 182 Mothers companies.

The main indices tracking the TSE are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun (Japan’s largest business newspaper), the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies maintained by Japan’s major broadsheet newspapers.

Ninety-four domestic and 10 foreign securities companies participate in TSE trading. See: Members of the Tokyo Stock Exchange

Other TSE-related institutions include:

  • The exchange’s press club, called the Kabuto Club (兜倶楽部, Kabuto kurabu), which meets on the third floor of the TSE building. Most Kabuto Club members are affiliated with the Nihon Keizai Shimbun, Kyodo News, Jiji Press, or business television broadcasters such as Bloomberg LP and CNBC. The Kabuto Club is generally busiest during April and May, when public companies release their annual accounts.

Market Movers

Constituents of the Nikkei 225 with the highest percent gain over one day.

ListingLastChangeVolume
Shinsei Bank Ltd8303:TYO1,968.00
JPY
+228.00
+13.10%
9.68m
Toho Zinc Co Ltd5707:TYO2,841.00
JPY
+130.00
+4.80%
805.10k
Isetan Mitsukoshi Holdings Ltd3099:TYO808.00
JPY
+35.00
+4.53%
2.68m
Hitachi Zosen Corp7004:TYO947.00
JPY
+32.00
+3.50%
3.45m
DeNA Co Ltd2432:TYO2,167.00
JPY
+72.00
+3.44%
709.60k
Kawasaki Kisen Kaisha Ltd9107:TYO6,380.00
JPY
+190.00
+3.07%
5.45m
Mitsubishi Chemical Holdings Corp4188:TYO1,040.50
JPY
+26.50
+2.61%
5.67m
Meiji Holdings Co Ltd2269:TYO7,260.00
JPY
+170.00
+2.40%
537.60k
Pacific Metals Co Ltd5541:TYO2,094.00
JPY
+44.00
+2.15%
596.40k
Mitsui Mining and Smelting Co Ltd5706:TYO3,590.00
JPY
+75.00
+2.13%
587.70k

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Asia Stocks Up As China PMI, U.S. Data Cheer Markets Worried Over Coronavirus Surge

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MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.9%, while U.S. stock futures, the S&P 500 e-minis ESc1, advanced 0.23%.Sentiment in the region, which got a boost from overnight gains on Wall Street thanks to strong housing data, got a further lift from a survey in China showing a quickening in activity in its vast factory sector.

The stock market in Australia , which has crucial economic links with China, rose 1.59%, while shares in China .CSI300 gained 0.72%. Hong Kong stocks .HSI jumped 1.18%, undeterred by the Chinese parliament’s passage of a security law that will increase Beijing’s control over the former British colony.

The Nikkei .N225 rose 2%, shrugging off a larger-than-expected decline in Japanese industrial production. Overall, however, Asian shares are still on course for a 7% decline over the first half of this year, underscoring the severity of the pandemic-sparked losses and the challenges facing investors as global infections continue to rise in a blow to hopes of a quick recovery.

“Overnight moves in markets were not large but one does get the distinct impression that markets have got it both ways – with equities rallying on rebounding data and bonds rallying on dismal COVID-19 news,” said ANZ Research analyst Rahul Khare.

Indeed, for the second quarter Asia ex-Japan shares were on course for a 17.8% gain, which would be the biggest quarterly increase since the third quarter of 2009. Stocks appear to have received an added boost on Tuesday as some investors adjusted positions on the last trading day of the quarter. On Monday, the Dow Jones Industrial Average .DJI rose 2.32%, the S&P 500 .SPX gained 1.47% and the Nasdaq Composite .IXIC added 1.2%.

China’s official purchasing managers’ index (PMI) released Tuesday showed factory activity in the world’s second-largest economy grew for a fourth straight month in June. China’s services sector PMI also expanded at a faster pace compared to the previous month. A recent resurgence in coronavirus infections had led some investors to question the strength of a rebound in global economic activity.

The swing in sentiment between hopes and fears has kept markets on edge. The yield on benchmark 10-year Treasury notes US10YT=RR was little changed at 0.6348% in Asia as traders braced for U.S. non-farm payrolls data on Thursday, which is forecast to show an improving labour market.

U.S. Federal Reserve Chairman Jerome Powell on Monday said the outlook for the world’s biggest economy is “extraordinarily uncertain” and signalled more monetary stimulus may be necessary, which could limit gain in yields. Confirmed COVID-19 cases worldwide rose past 10 million and deaths surpassed 500,000 on over the weekend.

The bulk of new cases were reported in the United States and Latin America, stoking fears that the outbreak could stall economic recoveries just as lockdowns begin to ease. In currency markets, the dollar held onto gains against the yen JPY= and the Swiss franc CHF= as the recent increase in coronavirus infections supported safe-haven demand for the greenback. [FRX/]

In the onshore market, the yuan CNY=CFXS rose slightly to 7.0685 against the dollar. U.S. crude CLc1 fell 0.48% to $39.51 a barrel, while Brent crude LCOc1 slipped 0.31% to $41.58 per barrel, weighed by concerns about oversupply after Libya cited progress in resuming oil exports. [O/R] Additional reporting by Stanley White in Tokyo; Editing by Sam Holmes & Shri Navaratnam

 

On Monday, the Dow Jones Industrial Average .DJI rose 2.32%, the S&P 500 .SPX gained 1.47% and the Nasdaq Composite .IXIC added 1.2%. China’s official purchasing managers’ index (PMI) released Tuesday showed factory activity in the world’s second-largest economy grew for a fourth straight month in June. China’s services sector PMI also expanded at a faster pace compared to the previous month.

A recent resurgence in coronavirus infections had led some investors to question the strength of a rebound in global economic activity. The swing in sentiment between hopes and fears has kept markets on edge.The yield on benchmark 10-year Treasury notes US10YT=RR was little changed at 0.6348% in Asia as traders braced for U.S. non-farm payrolls data on Thursday, which is forecast to show an improving labour market.

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U.S. Federal Reserve Chairman Jerome Powell on Monday said the outlook for the world’s biggest economy is “extraordinarily uncertain” and signalled more monetary stimulus may be necessary, which could limit gain in yields.

Confirmed COVID-19 cases worldwide rose past 10 million and deaths surpassed 500,000 on over the weekend. The bulk of new cases were reported in the United States and Latin America, stoking fears that the outbreak could stall economic recoveries just as lockdowns begin to ease. In currency markets, the dollar held onto gains against the yen JPY= and the Swiss franc CHF= as the recent increase in coronavirus infections supported safe-haven demand for the greenback. [FRX/]

In the onshore market, the yuan CNY=CFXS rose slightly to 7.0685 against the dollar.U.S. crude CLc1 fell 0.48% to $39.51 a barrel, while Brent crude LCOc1 slipped 0.31% to $41.58 per barrel, weighed by concerns about oversupply after Libya cited progress in resuming oil exports. [O/R]

U.S. crude fell 0.48% to $39.51 a barrel, while Brent crude slipped 0.31% to $41.58 per barrel, weighed by concerns about oversupply after Libya cited progress in resuming oil exports. [O/R]

By Stanley White, Imani Moise

Mar.12 — Dan Fineman, co-head of APAC equity strategy at Credit Suisse, discusses the fall in Asian markets and what it will take to stop the rout. He speaks on “Bloomberg Markets: China Open.”