USD/JPY Holds Steady

Normality appeared to have returned to the Tokyo market on Thursday, as the benchmark Nikkei 225 average closed up at a level it had not reached since the beginning of the Livedoor scandal.  The Nikkei 225 was 1.5 per cent higher at 15,891.02, while the Topix was 1.5 per cent higher at 1,643.29.  Shares of Livedoor plummeted 17.5 per cent to Y113. The Tokyo Stock Exchange further shortened the time Livedoor shares can be traded to 60 minutes from 90 minutes per day, on concern that a flood of sell orders could overwhelm the bourse’s trading system.  Livedoor’s shares have fallen about 80 per cent since January 16, when its offices were raided by prosecutors on suspicion of spreading false information to boost its share price. Since then, Takafumi Horie, Livedoor’s chief executive, has been arrested.  Securities houses gained most from the renewed confidence in the market, especially among retail investors. The sector as a whole was up 6.3 per cent. Nomura, Japan’s biggest securities house, was 3.5 per cent higher at Y2,195. Nikko Cordial, one of its biggest rivals, was up 5 per cent to Y1,780. Monex Beans, the online retail broker, was up 13.2 per cent to Y180,000.  Elsewhere, Fast Retailing, the operator of Uniqlo, Japan’s leading casual apparel chain, was 4.8 per cent higher at Y10,300 after it said it would launch a new brand of low-cost clothing to be sold at Daiei supermarkets. The move comes as Daiei – Japan’s third-biggest retailer – tries to rebuild its operations under the watchful eye of the state-backed rehabilitation body, after nearly teetering on the edge of bankruptcy. Daiei shares were up 3.1 per cent at Y3,700.  Aeon, the retail giant, was up 4.6 per cent to Y2,980 after raising its dividend forecast for the current year by 25 per cent.  Sony, the consumer electronics and entertainment conglomerate, was up 2.6 per cent to Y5,080, following reports that it was to invest in a second liquid crystal display joint venture with South Korea’s Samsung. After the markets closed, the company upwardly revised its full-year net profit forecast to Y70bn rather than a loss of Y10bn. Sales for the crucial third quarter rose 10 per cent to Y2,367.6bn and operating profits surged 47 per cent to Y202.8bn. Net profits gained 17 per cent to Y168.9bn, as buoyant sales of flat panel TVs and handheld games consoles helped its electronics business to return to the black.  But Sanyo Electric, the electronics manufacturer, lost Wednesday’s gains – falling 15.5 per cent to Y294 after announcing plans to issue convertible preferential shares.

 

JGBs continued weakening as stocks in Tokyo jumped, 10 year bond prices dropped -0.385 to 99.182 at 8:00 GMT, bringing yields to 1.495%.