Tokyo’s Nikkei stock in­dex closes at 21-year high

Tokyo’s bench­mark stock in­dex is now back at lev­els last seen the year that Prince Charles and Princess Diana di­vorced, Bill Clin­ton won his sec­ond term as U.S. pres­i­dent and Nin­tendo launched its Poke­mon brand

Daily Sabah (Turkey) - - Money -

TOKYO’S bench­mark stock in­dex closed at a more than two-decade high Wednesday, as the Ja­panese market rides a global eq­ui­ties rally with its US coun­ter­parts hit­ting fresh records.

The Nikkei 225 rose 0.28 per­cent, or 57.76 points, to end at 20,881.27, its best fin­ish since De­cem­ber 1996, while the broader Topix in­dex added 0.10 per­cent, or 1.67 points, to close at a decade high of 1,696.81.

The Nikkei is now back at lev­els last seen the year that Prince Charles and Diana di­vorced, Bill Clin­ton won his sec­ond term as U.S. pres­i­dent and Nin­tendo launched its Poke­mon brand.

It was also the year that for­mer U.S. Fed­eral Re­serve chair­man Alan Greenspan used the term “ir­ra­tional ex­u­ber­ance”, widely seen as a warn­ing about over­heat­ing mar­kets.

Ja­pan Inc. has been re­port­ing bumper prof­its and the world’s num­ber-three econ­omy is on an up­swing, but the Asian market has also ben­e­fited from a global eq­ui­ties rally that saw Wall Street chalk­ing up more record fin­ishes on the past two weeks.

The Nikkei was be­low the 15,000 mark in June last year after Bri­tain’s vote to exit the EU pum­meled world mar­kets, while a strong yen hit Ja­panese ex­porters. The in­dex bounced back since U.S. Pres­i­dent Don­ald Trump was elected as deal­ers bet on his plans for big spend­ing and tax cuts.

Ja­pan kicks off its lat­est earn­ings sea­son this month while the na­tion’s econ­omy has logged its long­est string of quar­terly gains in a decade.

The In­ter­na­tional Mone­tary Fund up­graded its view of the coun­try’s econ­omy on Tues­day, say­ing it now ex­pects 1.5 per­cent GDP growth in 2017 and 0.7 per­cent next year, up from a July pro­jec­tion of 1.3 per­cent and 0.6 per­cent re­spec­tively. It cited a pickup in ex­ports and stronger con­sumer spend­ing. “The global econ­omy is do­ing well and hopes for US in­ter­est rates are on the rise,” said Toshi­hiko Mat­suno, chief strate­gist at SMBC Friend Se­cu­ri­ties.

GROWTH PLAN

Boost­ing U.S. bor­row­ing costs tends to strengthen the dol­lar against the yen, which is good for the prof­its of Ja­pan’s ex- port­ing firms.

The yen has weak­ened over the past few years after Prime Min­is­ter Shinzo Abe swept to power on a pledge to re­sus­ci­tate the once-boom­ing econ­omy with a plan dubbed Abe­nomics.

The scheme - a mix of ag­gres­sive mone­tary eas­ing and huge gov­ern­ment spend­ing along with re­forms to the econ­omy - fat­tened cor­po­rate prof­its and sent the stock market higher. But it has largely failed in the goal of shrug­ging off the de­fla­tion that has plagued Ja­pan for years and held back growth.

“Cor­po­rate earn­ings have risen to the best lev­els ever,” said Hisao Mat­suura, chief strate­gist at No­mura Se­cu­ri­ties, who added that Abe’s growth plan has contributed “a bit.” “It’s true that the yen dropped in the past few years” dur­ing his ten­ure, he said.

The Nikkei was be­low 10,000 when Abe came to power. But it re­mains far be­low a record close of al­most 39,000 in the last days of 1989 be­fore a stock and prop­erty market bub­ble collapsed. The in­dex then be­gan a long de­scent as the once red-hot Ja­panese econ­omy fell into years of malaise.

Yes­ter­day, Nin­tendo shares gained 1.47 per­cent to end at 44,030 yen ($392.44) while Fu­jitsu climbed 1.81 per­cent to 878.6 yen. Bank­ing gi­ant Mit­subishi UFJ was up 0.15 per­cent at 728.4 yen.

De­spite the over­all market ad­vance on Wednesday, Kobe Steel plunged 17.8 per­cent to 878 yen, div­ing for a sec­ond day after the man­u­fac­turer ad­mit­ted to fal­si­fy­ing data linked to the strength and qual­ity of prod­ucts.

Some of Ja­pan’s big­gest car­mak­ers in­clud­ing Toy­ota, Nis­san and Honda used ma­te­ri­als from the steel­maker that are now un­der the mi­cro­scope.

Toshiba rose 0.31 per­cent to 318 yen on re­ports that the Tokyo Stock Ex­change would take the trou­bled com­pany off a watch list, say­ing its in­ter­nal gov­er­nance has im­proved since a 2015 profit-pad­ding scan­dal. It was con­firmed after mar­kets closed.

The com­pany still runs a risk of be­ing delisted by next year if it fails to re­pair its bal­ance sheet fol­low­ing mas­sive losses at its US nu­clear busi­ness.

An elec­tron­ics stocks in­di­ca­tor dis­plays share prices of the Tokyo Stock Ex­change, Oct.11

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