Nikkei Soars 3% After BOJ Offers Loosens Lending Program Terms

Hiruki Nakamura
18 Feb, 2014
New York City

Bank of Japan in a surprise move improved on the margin its two small private sector lending program to increase growth in loans. The move surprised investors and the Nikkei surged 3%.

[R]4:30 PM Tokyo – Bank of Japan in a surprise move improved on the margin its two small private sector lending program to increase growth in loans. The move surprised investors and the Nikkei surged 3%.[/R]

Tokyo market indexes soared the most in more than five months after the Bank of Japan offered more stimulus and stayed firm on its bond purchase commitment.

The Nikkei 225 Stock Average climbed 450.13 or 3.1% to 14,843.24 and the Topix index jumped 31.95 or 2.7% to 1,224.

The Bank of Japan doubled a growth funding facility to 7 trillion yen of $68 billion and also offered a one year extension for such a facility. The move was noted in a statement released by the central bank after two-day meeting.

The central bank also said banks can borrow twice the amount under the previous program at low interest rate to support the growth in the economy.

The central bank move appeared to support growth without lowering any interest rate and also sent a signal that the bank is watching the growth drivers.

The central bank also kept its commitment to increase its monetary base by 60 trillion yen to 70 trillion yen a year.

The yen eased to 102.66 against the U.S. dollar.

Stocks in Review

Toyota Motor Corp jumped 152 yen to 5,945 yen. Honda Motor Co increased 74 yen to 3,821 yen. Nissan Motor Co Ltd gained 19 yen to 938 yen.

Sony climbed 62 yen or 3.6% to 1,780 yen.

Softbank Corp soared 303 yen or 4% to 7,817 yen. Fast Retailing Co surged 1,515 yen or 4.4% to 36,265 yen.

Aeon Co Ltd gained 1.6% to 1,279 yen after the retailer and the largest mall developer in Japan said it will build more shopping malls in China.

Mitsui O.S.K. Lines Ltd climbed 3.4% to 424 yen after the shipping company intends to invest as much as 400 billion yen or $3.9 billion in deep-sea gas production and transportation.

Renesas Electronics Corporation soared 8.6% to 630 yen after the chip maker plans to produce next generation of advanced chips for automobiles as early as this year.