Bank of Japan Holds Bond Program, Nikkei in 6-Day Rally

Hiruki Nakamura
22 May, 2015
New York City

Bank of Japan offered a slightly upbeat assessment of the economic recovery and held its unprecedented monetary stimulus. Stocks rallied for the sixth session in a row. Market capitalization of stocks on the mainboard of TSE closed at a record high after 26 years.

[R]4:30 PM Tokyo – Bank of Japan offered a slightly upbeat assessment of the economic recovery and held its unprecedented monetary stimulus. Stocks rallied for the sixth session in a row. Market capitalization of stocks on the mainboard of TSE closed at a record high after 26 years.[/R]

Nikkei average in Tokyo surged for the sixth day in a row in thin trading after the Bank of Japan offered mildly optimistic assessment of the economic recovery.

The central bank kept it unprecedented bond buying program and offered an upbeat view of the modest rebound in consumption.

As expected, the Bank of Japan kept monetary policy committee decided to keep monetary policy on hold by 8-1 vote.

Earlier in the day, the bank maintained its large easing program of purchasing 80 trillion yen of assets annually, the Policy Board of the Bank of Japan said.

The policymakers refrained from providing additional monetary stimulus as the economy in the first-quarter expanded at 2.4% annual rate from a year ago.

The Nikkei 225 Stock Average gained 61.54 or 0.3% to 20,264.41 and the broader Topix index edged up 1.05 to 1,647.85. For the week, Nikkei 225 climbed 2.7%.

The yen closed at 120.75 against a dollar.

The market capitalization of all stocks listed on the main board of the Tokyo Stock Exchange closed at a record high, surpassing the previous record at the height of the asset bubble in December 1989.

Market capitalization on the main board rose to 591.30 trillion yen, ahead of the previous record of 590.09 trillion yen, according to a report compiled by the Tokyo Stock Exchange and reported by Reuters.

Stocks in Review

Itochu Corp jumped 2.6% to 1,660 yen after the trading house lifted its outlook for dividend and promised to pay record dividend for each of the next three years.

Mitsubishi UFJ Financial Group Inc fell 0.8% to 899.50 after the Nikkei news reported financial services provider forecasted foreign operations to generate 40% of net operating profit in the year ending in 2018.

The group estimated global net operating profit to soar 19% to 1.67 trillion yen and overall profit from overseas operations are expected to surge 35% to 675 billion yen.

The bank forecasted profit from retail business in domestic market to climb 17% to 400 billion yen and profit from corporate business segment to jump to 520 billion yen by expanding loans to small and midsize companies 5% to 15 trillion yen.

Skylark Co Ltd plunged 5.5% to 1,696 yen after the restaurant operator said the U.S.-based private equity firms Bain Capital and Japan Industrial Partners Inc will sell as many as 45.8 million shares in a secondary offering to reduce its stake from 70% to less than 50%.

Seibu Holdings Inc tumbled 11.4% to 2,923 yen after the U.S.-based private equity group Cerberus Capital Management LP reduced its stake by 9.9 percentage points to 25.6% by selling 33.75 million shares of the transport company for about $878 million.

Toshiba Corporation rose 0.4% to 411 yen after the electronic products maker said it would investigate accounting practices in its TV, computer and chip businesses.

Last week, the industrial conglomerate set up a third-party committee to conduct an independent inquiry in infrastructure and construction businesses.

Toshiba said it plans to release earnings as early as possible after the investigation is completed.