Investors cheer LDP win in Japan
Japanese shares gained, with the Nikkei 225 index rising to its highest in eight months, as the yen fell after the Liberal Democratic Party regained power.
The Nikkei 225 rose 1.5 per cent to 9884.16 in afternoon trade, its highest since April 3. The measure has gained 14 per cent since November 14 when elections were announced.
Tokyo Electric Power Co (Tepco) led gains on expectations the new government will restart nuclear reactors. Tepco surged 33 per cent to lead utilities higher. Fast Retailing Co, Asia’s biggest clothing retailer, gained 4.6 per cent.
Honda Motor, an automaker that counts North America as its biggest market, gained 1.1 per cent after the yen weakened against the US dollar. Property-developer Tokyo Tatemono increased 6.7 per cent.
The LDP has called for more easing and a doubling of the nation’s inflation goal. The broader Topix Index climbed 1.2 per cent to 810.42, with all but one of its 33 industry groups gaining.
‘‘The market hasn’t priced in this kind of a landslide win,’’ said Hideyuki Ishiguro, senior strategist at Okasan Securities in Tokyo. ‘‘There’s more certainty that LDP will make progress in deflation-fighting agenda. This could be a turning point for Japanese stocks.’’
The LDP yesterday captured 294 seats in the 480-member lower house of parliament, while Prime Minister Yoshihiko Noda’s Democratic Party of Japan lost three-fourths of its lawmakers, according to public broadcaster NHK’s vote count.
LDP leader Shinzo Abe, 58, is set to replace Noda, returning to the office he left five years ago for health reasons.
Japan’s economy, still reeling from last year’s record earthquake and nuclear disaster, last quarter fell into its fifth technical recession in 15 years, while confidence among the country’s largest manufacturers slid to the lowest in about three years, according to the Bank of Japan’s Tankan index.
Fast Retailing, the operator of the Uniqlo clothing store, gained 4.6 percent to 20,840 yen. Tokyo Tatemono jumped 6.7 per cent to 365 yen.
Mitsubishi UFJ Financial Group, the nation’s biggest bank by assets, rose 1.8 per cent to 395 yen.
‘‘Investors are relieved for now,’’ said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. The LDP ‘‘obtained a lot more seats than was expected, so there may be more optimism that they can implement policies. A lot of the expectations for their monetary easing has been priced into stocks, so for things to rise further, they need to make it a reality.’’
The Japanese yen weakened to the lowest level against the dollar since April 2011 on bets Abe’s victory in Japan’s general election adds to the case for the nation’s central bank to expand stimulus as early as this week.
Exporters advanced. Honda rose 1.1 per cent to 2,861 yen. Toyota, the world’s biggest carmaker, increased 1 per cent to 3,635 yen.
Sony, Japan’s biggest exporter of consumer electronics, rose 2.1 per cent to 925 yen.
‘‘This is going to have a tremendous impact on the fortunes of Japanese exporters and the economy,’’ Ed Rogers, chief executive at Tokyo-based Rogers Investment Advisors, said in a Bloomberg Television interview today. ‘‘The moves in the dollar-yen indicate that the world at large believes that we’re starting on the path to reflation.’’