Japan Rises 2.6% in Asia Rally

123jump.com Staff
04 Feb, 2008
New York City

Asian markets rallied across the region led by a sharp rebound in Shanghai, Hong Kong, and Japan. Japanese stocks advanced after the offer of $45 billion from Microsoft for Yahoo. Softbank soared 18% on the news. Softbank owns 52 million shares in Yahoo and owns 41% of Yahoo Japan. Financial stocks in Japan closed higher on the news that a group of eight large banks are working on a plan to provide financing to MBIA and Ambac, two large bond insurers in the U.S.

[R]5:00AM New York, 7:00 PM Tokyo – Stocks in Japan rallied after the news Microsoft offer for Yahoo and a potential deal between eight banks to support faltering bond insurers.[/R]

Stocks in Japan gained on the news eight banks have joined hands to finance U.S. bond insurer Ambac Financial Group and after Microsoft made a $45 billion bid for rival Yahoo!

Market Sentiment

In Tokyo trading Nikkei 225 Index rose 2.69% or 362.54 to 13,859.70, and the broader Topix Index gained 2.1% or 27.86 to 1,364.72.

In the first section of the Tokyo Stock Exchange 9.3 billion shares valued at 1.1 trillion yen were traded and in the second section 498 million shares valued at 5 billion yen changed hands.

Of the Nikkei 225 stocks 187 gained, 35 declined, and 3 were unchanged. Casio Computer led advancers in the Nikkei 2205 Index stocks with a rise of 18% followed by Softbank Corp. jumping 15.81% after Microsoft Corp made up $45 billion takeover bid of Yahoo!

Market Drivers

Reuters news reported last week that a group of eight large banks have allied to bailout bond insurer Ambac Financial Group and hedge against further losses.
CNBC reportedly said the eight banks working on the plan are Barclays, BNP Paribas, Citigroup, Dresdner Bank, Royal Bank of Scotland Group, Societe Generale, UBS AG and Wachovia Corp.
Greenhill & Co are advising on the deal.
Ambac Financial has underwritten $524 billion of bonds and MBIA has issued guarantee for $679 billion of mortgage related securities.
The yen edged higher to 106.85 to 106.87 against the dollar at the close of trade.
Casio Computer led advancers in the Nikkei 225 Index shares with a rise of 17.99% followed by gains in Softbank Corp. of 15.81%, in Minea Holdings of 14.36%, in Yahoo! Japan Corp of 9.52%, and in Mitsubishi Corp of 9.01%.

Eisai Co. Limited led decliners in the Nikkei 225 Index stocks with a drop of 6.61% followed by losses in Clarion Co. Limited of 6.12%, in JFE Holdings Inc. of 5.49%, in Nikon Corp. of 3.42%, and IHI Corp. of 2.84%.

Earnings News

Casio Computer gained after reporting that third quarter net sales rose from 580 billion yen to 620 billion yen. Operating income also increased from 43.1 billion yen to 48 billion. Net income in the quarter leapt from 23.7 billion yen to 25.1 billion yen.

National Telegraph and Telephone Corp reported that third quarter profits rose 6% to 125.7 billion yen from 118.6 billion yen a year ago on a 0.9% increase in sales to 2.66 trillion yen.

Operating profit also increased 13% to 310.4 billion. Full-year profit for the year through March was left unchanged at 530 billion yen.

Mergers and Acquisitions

Softbank Corp. also rose on news that Microsoft Corp. had made a bid for Yahoo! in a bid to challenge Google in Internet search and online ad markets. Softbank has 41% equity in Yahoo! Japan and also holds 52.3 million shares of U.S. based Yahoo!

Yahoo! Japan also rose on the news.

Financial stocks rose on the news that eight financial institutions are set to provide financial support to U.S. bond insurer Ambac Financial Group. Mitsubishi UFJ Financial Group rose 3.92%, Mizuho Financial Group edged up 4.65% and Resona Holdings increased 4.32%.

Nikkei news reported today that Takeda Pharmaceutical and the U.S. bio-technology company Amgen Inc have entered into an alliance and the purchase of the Amgen Japan subsidiary. According to the preliminary details of the deal, Takeda may pay as high as $1.18 billion for Amgen Japan unit and future royalties, research and development for new drugs for the Japanese markets. Under the deal, Takeda will initially pay $200 million, while about $750 million is tied to the development of new drugs. The stock closed down 0.63% on the news.

Separately, the online news edition reported that Mitsubishi Motors will close its Australian unit in early March because of low capacity utilization due to weak sales of the large sedans produced at the plant.

Asian Markets Closings

In Tokyo Nikkei 225 Index closed higher 362.54 or 2.69% to 13,859.70, in Hong Kong Hang Seng index increased 908.50 or 3.77% closed to 25,032.08, in Australia ASX 200 index higher 24.50 or 0.42% to close 5,867.40.

In South Korea Kospi Index increased 55.60 or 3.40% to close at 1,690.13, in Thailand SET index closed higher 0.73 or 0.09% to 811.56, and Indonesia JSE Index edged increased 54.81 or 2.07% to 2,701.63. Sensex index in India increased 417.70 or 2.29% to 18,660.32.