Tokyo: Japan’s Nikkei average rose for the first time in four sessions on Tuesday, 20 November pulling out of a slide to 16-month lows earlier in the day, buoyed by a $1.8 billion bid led by a US buyout firm to buy a third of midsize lender Shinsei Bank Ltd.
Aozora Bank also soared after unveiling plans for a business alliance with much larger lender, Sumitomo Trust & Banking Co — as talk of banking industry consolidation turned around a market that had been hit by another rough day on Wall Street.
Renewed credit worries and concerns about the strength of the US economy, along with a firmer yen, hit Japanese stocks early in the day — sending the broader Topix index to a two-year low — until the banking sector news sent Shinsei and Aozora shares both up more than 10%, helping revive the wider market.
The Nikkei ended up 1.1% at 15,211.52 after earlier falling to 14,751.27, its lowest since July 2006.
The Topix rose 0.9% to 1,469.27 after dropping to 1,420.57, its lowest since October 2005.
Shinsei Bank jumped 9.3% to 398 yen after it said a group of investors led by US buyout firm J.C. Flowers & Co would bid $1.8 billion to buy a stake of up to 32.6%.
Aozora Bank soared 6.9% to 340 yen on the news of the alliance with Sumitomo Trust, which rose 2.2% to 796 yen. Reuters
Tokyo: Japanese share prices fell 1.9% in morning trade Tuesday, 20 November, briefly slipping to a 16-month low after trouble on Wall Street sparked by banking sector woes, dealers said.
Sentiment was also hurt by a sharp overnight rise in the yen, which hurts exporters, they said.
The Tokyo Stock Exchange’s Nikkei-225 index dropped 285.89 points to hit 14,756.67 at the end of the morning session, sliding below the symbolic 15,000-point mark. In morning trade, it slid to intraday levels not seen for 16 months.
The broader Topix index of all first-section shares fell 33.68 points or 2.31% to 1,422.93.
Declining shares far outnumbered gainers 1,529 to 126, with 50 issues unchanged.
Volume reached an estimated 1.1 billion shares, up from an estimated 763 million shares Monday morning.
“Wall Street’s fall, the yen’s appreciation and pre-opening sell orders by foreign brokerages prompted investors to sell,” said Hiroichi Nishi, equity chief at Nikko Cordial Securities.
Financial markets have witnessed turmoil in recent months over rising defaults by “subprime” customers who received loans at the height of the US housing boom, prompting fears of a liquidity shortage.
In New York overnight, Goldman Sachs set the market tone when it downgraded large banks and estimated that Citigroup would have to write down 15 billion US dollars due to its exposure to risky debt over the next two quarters.
US investors also remained wary about the housing market and its impact on consumer spending. The National Association of Homebuilders said its November housing forecast remained unchanged at record lows.
“In addition to continued volatility on overseas markets where worries about the credit crunch remain, whether or not the appreciation of the yen will take a breather is key for the Japanese market,” said Shinko Securities analyst Masahiro Yamaguchi.
The financial sector led declines, with Mizuho Financial Group falling 18,000 yen or 3.4% to 508,000 and Mitsubishi UFJ Financial Group down 33 yen or 3.5% to 915.
Sumitomo Mitsui Financial Group, which on Monday announced a 30% fall in first half net profit due to subprime-related losses, fell 23,000 yen or 2.9% to 767,000.
Metal and steel makers fell across the board after metal prices fell overnight and amid profit-taking.
Mitsubishi Materials fell 4.7% to 533 yen, while Nippon Steel dropped 5% to 597. AFP