Japanese Banks Surge on Delayed Reforms

123jump.com Staff
16 Dec, 2009
New York City

Banks in Japan surged after regulators hinted that the capital adequacy required under Basel convention will be delayed for a decade. Japan

[R]5:00 AM New York, 7:00 PM Tokyo – Banks in Japan surged after regulators hinted that the capital adequacy required under Basel convention will be delayed for a decade. Japan’s demand for services increased 0.5% in September.[/R]

The benchmark stock index rose 0.9% leveraged by financial stocks as global financial regulators delayed the implementation of tougher capital rules.

The Basel Committee on Banking Supervision will gradually introduce the new rules effective 2012 over a transition period of 10 years according to regulators quoted in local media.

In Tokyo trading Nikkei 225 Index rose 0.9% or 93.93 to 10, 177.41, and the broader Topix Index jumped 1.5% to 898.29.

In the first section of the Tokyo Stock Exchange 15.1 billion shares worth 788 billion yen were traded and in the second section 284 million shares valued at 2.5 billion yen changed hands.

Of the Nikkei 225 index stocks 162 gained, 51 dropped, and 12 were unchanged. Mizuho Financial Group led gainers in the index shares with a rise of 15.8% followed by Sumitomo Mitsui Financial Group soaring 14.3%.

Financial stocks also advanced as well. Sumitomo Trust & Banking edged up 6.1% to 467 yen and Mitsubishi UFJ Financial Group advanced 4.9% to 470 yen.

Japan Demand for Services Rise 0.5% in September

Ministry of Industry, Trade and Economy reported today the country’s indices of Tertiary Industry Activity, which measures demand for services, rose 0.5% to 96.8 in September in seasonally adjusted terms.

Industries that expanded were information and communications 5.6%; wholesale and retail trade 0.6%; electricity, gas, heat supply and water 3.2%; accommodations, eating and drinking services 1.3%; learning support 2.5%; transport and postal activities 0.1% and compound services 1.2%.

However, industry that shrank were scientific research, professional and technical services 6.4%; living-related and personal services and amusement services 2.9%; miscellaneous services (Except Government Services etc) 1.4%; real estate and goods rental and leasing 0.6%, finance and insurance 0.4%.

Medical, health care and welfare was flat.

Delayed Tougher Capital Rules for Banks

Nikkei News reported today that global banking regulators have agreed to defer the enforcement of new capital adequacy rules for big banks and have opted to create a transition period of ten years.

The proposed changes entail raising the minimum capital ratio for banks from 8%. Basel Committee on Banking Supervision will however gradually introduce new rules effective 2012 and the broader reforms will not be fully implemented until at least in the early 2020s.

The committee has been working on stricter capital requirements since September 2008.

Fiscal 2010 Tax Reforms Delayed to Next Week

Separately, the online Nikkei edition reported that Finance Minister Hirohisa Fujii said today government might not be able to complete a key outline of the 2010 tax reforms until next week, raising fears this might delay drafting of the budget.

Fujii said the Cabinet remains committed to draw up the budget by the end of the year.

Gainers & Losers

Mizuho Financial Group led advancers in the Nikkei 225 index stocks with a rise of 15.8% followed by increases in Sumitomo Mitsui Financial Group of 14.3%, in Shinsei Bank Ltd. of 3.5%, in Mizuho Trust & Banking of 8.5%, and Chuo Mitsui Trust of 7.7%.

Isuzu Motors led decliners in the Nikkei 225 index stocks with a decline of 3% followed by losses in NSK Ltd. of 2.9%, in Sumitomo Osaka of 2.8%, in Nippon Express of 2.5%, and Clarion Co. Ltd. of 2.3%.

Other Movers

Aozora Bank, Ltd surged 14.2% to ¥112.00 as bank shares jumped a report that new capital-adequacy rules may be delayed by at least ten years.

Capcom Co Ltd the home game software rose 4.0% to ¥1,425 and Cybozu, Inc the Internet-software developer decreased 5.1% to ¥37,450.00.

Intellex Co closed unchanged at ¥63,000.00 after the real estate company said that it has raised its mid-year consolidated outlook for revenue from ¥12,076 million to ¥13,918 million.

Mizuho Financial Group, Inc surged 15.8% to ¥182.00, Mitsubishi UFJ Financial Group, Inc gained 4.9% to ¥470.00 and Mizuho Trust & Banking Co Ltd rose 8.5% to ¥89.00.

Namco Bandai Holdings Inc rose 3.7% to ¥895.00.

Shinsei Bank, Limited increased 13.4% to ¥118.00 and Sumitomo Mitsui Financial Group, Inc surged 14.3% to ¥3,030.00.