Aso Leads LDP; Nikkei Rise 1.4%

123jump.com Staff
22 Sep, 2008
New York City

Stocks in Japan rose on the optimism that the U.S. bailout plan of $700 billion will improve liquidity in the credit markets. The Bank of Japan added liquidity to the system. Commodities prices gained as well. Taro Aso was elected as the leader of the LDP party. Konica Minolta surged 13%.

[R]5:00AM New York, 7:00PM Tokyo – The U.S. bailout plan lifted Tokyo stocks. Bank of Japan adds 1.5 trillion yen in financial system.[/R]

Stocks in Japan rose sharply after the U.S. proposed a bailout plan to purchase the riskiest and illiquid mortgage bonds and hold them in a fund. The proposed plan calls for $700 billion of capital injection in the credit markets. The move is nothing short of bailout of rich investment banks that took excessive leverage and operated outside the U.S. financial regulators supervision.

Rising oil and metal prices also leveraged stocks.

After the close Mitsubishi UFJ Financial agreed to take up to 20% stake in Morgan Stanley. The troubled investment banker will transform into the depository institutions and will operate under the supervision of Federal Reserve and will be able to access cheap source of funding from the Fed Discount Window.

Market Sentiment

In Tokyo trading Nikkei 225 gained 1.42% or 169.73 to 12,090.59, and the broader Topix Index edged up 1.7% or 195.7 to 1,168.69.

In the first section of the Tokyo Stock Exchange 20 billion shares worth 2.2 trillion yen were traded and in the second section 595 million shares valued at 6 billion yen changed hands.

Of the Nikkei 225 stocks 153 rose, 69 declined, and 3 were unchanged. Konica Minolta led advancers in the index shares with a rise of 12.83% followed by NGK Insulators gaining 12.66%.

Bank of Japan Adds 1.5 Trillion Yen

The Bank of Japan reported today that it has added 1.5 trillion yen to the financial system in a bid to provide more liquidity and calm the turbulence rocking the global financial sector.

The U.S. Treasury proposed a bailout plan of $700 billion in a fund that will purchase the riskiest mortgages that are hard to trade. The plan is an effective bailout of troubled financial institutions and rich investment bankers and is designed to unclog the credit market squeeze and free up capital for normal commercial lending. The credit market crisis in the U.S. has deepened from the residential housing market to financial institutions and is expected to slow down the economy. The U.S. economy is in the danger if recession and may slow down the world economy.

Taro Aso Elected Leader of LDP

The Nikkei News reported on its Web site today that former Foreign Minister Taro Aso assumed the helm of the Liberal Democratic Party after an overwhelming victory today.

It is hoped that the election of the popular Aso will make the LDP win the House of Assembly in elections to be called soon.

Gainers & Losers

Konica Minolta led advancers in the Nikkei 225 index shares with a rise of 12.83% followed by increases in NGK Insulators of 12.66%, in Resona Holdings of 10.13%, in Inpex Holdings of 9.74%, and Nomura Holdings of 9.58%.

Resona Holdings rose on plans by the U.S. government to introduce a $700 billion package to bail out troubled financial companies.

Commodity stocks also edged up after Oil prices for October delivery climbed 6.8% to $104.55 per barrel. Nippon Mining House soared 8.19%, Nippon Oil increased 6.83%, and Mitsubishi Corp advanced 9.23%.

GS Yuasa Corp. led decliners in the Nikkei 225 index shares with a fall of 18.98% followed by losses inn Toray Industries of 9.62%, in Nikon Corp. of 6.87%, in NTT Data Corp. of 6.24%, and Asahi Breweries of 6.23%.