Thursday, February 22, 2007

Tokyo financial sectors higher on rate hike

by Elaine Frei

In Tokyo on Thursday, the Nikkei 225 closed 1.1 percent higher to 18,108.79, the first time the index has ended a session above the 18,000 level in nearly seven years.  The Topix index added 0.9 percent to 1,802.90, while the Mother’s index gained 4 percent to 1,162.25.  The gains came as investors reacted to Wednesday’s announcement from the Bank of Japan that it was raising the interest rate to 0.5 percent.

Banks added 0.7 percent as a sector on the expectation that higher interest rates would allow the banks to increase their margins on loans.  Mitsubishi UFJ (TYO: 8306; NYSE: MTU) matched the sector’s gain, rising 0.7 percent to ¥1,520,000.

The real estate sector was also higher, adding 3.3 percent as a whole.  The gains there were rather counterintuitive, as higher interest rates generally tend to hurt the market for properties.  Analysts believe that the gains mean that investors believe that the rate hike is a way of the Bank showing its confidence in the nation’s economy.  Mitsui Fudosan (TYP: 8801; NASDAQ: MDSFF) added 1.8 percent to ¥3,490, while Mitsubishi Estate (TYP: 8802) gained 3.5 percent to ¥3,820.

In the securities sector, Nomura Holdings (TYO: 8604; NYSE: NMR; SGX: N33) outstripped the sector as a whole, adding 4.9 percent to ¥2,770, while the sector gained 4.7 percent on the session.

 

 

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