Dow Jones Business News
Japan Bank Shares Soar On BOJ Stock Buying Report
Wednesday April 30, 11:56 pm ET
TOKYO -(Dow Jones)- Shares of Japan's leading banks continued to surge Thursday as a local report raised hopes the government may call on the Bank of Japan to take action to support their stock prices.
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Major banks soared in the morning session, partly benefiting from a spillover of massive buy orders on short-covering from the previous day. UFJ Holdings Inc. (J.UFJ or 8307) went limit-up to Y106,000, up 10.4%, while Mizuho Financial Group Inc. (J.MFN or 8411) also went limit-up to end the morning up 7.8% at Y68, 700.
Sumitomo Mitsui Financial Group Inc. (J.SMF or 8316) climbed 9.1% to Y204,000, while Mitsubishi Tokyo Financial Group Inc. (MTF or 8306) added 7.2% to Y433, 000.
With the exception of Sumitomo Mitsui, the megabanks rose by their daily limits.
Stock market traders attributed the gains to active short-covering by investors looking for short-term gains, but buying was also prompted by a Nihon Keizai Shimbun report the ruling coalition's economic plan expected this month will include steps to help improve supply and demand conditions for bank shares.
The ruling parties will ask the Bank of Japan to buy bank shares in addition to non-bank shares under the central bank's stock purchase program, the newspaper said. Bank-held shares which the BOJ purchases currently exclude shares of the banks themselves.
The coalition, wanting to cushion the impact of weak banks shares on the overall stock market, will also ask the central bank to raise its stock purchase ceiling to Y4 trillion from Y3 trillion, the newspaper reported.
Traders are skeptical about the sustainability of the bank share rebound, however.
Cosmo Securities general manager Hiroshi Sato said there may be "another round of hedge selling" on concerns over costs related to preferred shares issued by some megabanks this year. The issuances have raised concerns about the banks' financial health.
Investor concerns aren't limited to banks which issue preferred shares - even Mitsubishi Tokyo, which issued common shares, has also been out of favor amid concerns about the banking sector's bad loan problem.
Goldman Sachs' analyst David Atkinson said Mitsubishi Tokyo looks oversold if the banking group's fair valuation and the market value of its unit, Union Bank of California, are taken into account. |
