Tokyo stocks rise by break as SoftBank surges on buyback

 16 Feb 2016 - 8:43

Tokyo stocks rise by break as SoftBank surges on buyback
 


Tokyo: Tokyo stocks ended the morning session higher Tuesday, as a weaker yen boosted exporters while mobile giant SoftBank surged as it kicked off a multi-billion-dollar share buyback.

The Japanese market sunk into negative territory at the start as investors booked profits on the back of a more than seven percent rally in the benchmark Nikkei 225 index Monday.

But another fall in the yen -- driven by speculation over more stimulus from the Bank of Japan after weak GDP figures -- helped exporters push the market back into the black.

The dollar bought 114.67 yen from 114.60 yen in London and well up from Friday's 113.25 yen.

By the break the Nikkei 225 rose 0.90 percent, or 144.26 points, to 16,166.84 by the break, while the Topix index of all first-section shares climbed 1.16 percent, or 15.00 points, to 1,307.23.

Market heavyweight SoftBank surged nearly 16 percent to 5,099 yen after it said on Monday it would buy back about 14 percent of its shares for more than $4.0 billion over the course of a year.

The buyback -- which tends to beef up a stock's value -- came after the firm's stock dropped 28 percent from the start of 2016.

According to Bloomberg data, Topix-listed shares were trading at book value as of Friday -- the lowest valuations since Prime Minister Shinzo Abe swept to power in late 2012 on a ticket to boost the economy. A firm's book value refers to its net asset value and a stock trading at that level can suggest it is undervalued.

"Even though the market is still very volatile and anxiety hasn't melted away, it feels that we've entered the rebound stage," said Kazuhito Suzuki, senior strategist at Shinkin Asset Management.

But Toshihiko Matsuno, chief strategist at SMBC Friend Securities, warned that "it is too early to say we have seen the bottom".

Also Tuesday, the Bank of Japan kicked off its negative-interest rate policy, announced last month, in a bid to stoke commercial bank lending.

The move, widely panned as a desperate bid to keep alive Tokyo's efforts to resuscitate the economy, comes as official data Monday showed the world's number three economy contracted in the last quarter of 2015.

The BoJ's latest stimulus policy effectively charges commercial banks for storing excess reserves in its vaults, giving them an incentive to lend out the cash instead.

In share trading Mitsubishi Heavy jumped 6.33 percent to 410.1 yen on a report that the company is set to announce an order for 20 of its new regional jets for nearly $1.0 billion.

AFP