By BRAD FRISCHKORN
TOKYO?Tokyo stocks soared in early Friday trading, hitting their highest level in four years and seven months, as investors piled into stocks a day after the Bank of Japan announced a massive monetary policy easing program, helped along by a weakening yen.
Japanese stocks are soaring after the Bank of Japan announced bold measures to beat deflation. Paul Krake of View From the Peak tells the WSJ?s Mariko Sanchanta why this is a good time for Japanese companies to make acquisitions abroad.
As of 0020 GMT, the benchmark index was up 4.3% at 13,173.67 after hitting its highest level since Aug. 18, 2008. The sharp gains followed the prior session's 2.2% rise.
The dollar rose again from prior day levels, and was changing hands at about 96.83 yen (about $1).
"Foreign investors now have no choice but to buy Japanese stocks," said Kenichi Hirano, market analyst at Tachibana Securities. "Europe remains mired in debt and employment problems, while U.S. shares are looking very pricey. Japan is the most undervalued market in the world, offering the best chance for equity price appreciation."
The central bank said Thursday it will increase the monetary base at an annual pace of ?60 trillion (about $633 billion) to ?70 trillion, essentially doubling it to ?270 trillion by the end of 2014, and extend the average remaining maturity of its Japanese government bond purchases to seven years from three years.
It also said it would sharply expand its purchases of exchange-traded funds to ?2.5 trillion by the end of this year, and to ?3.5 trillion by end of next year. The BOJ will also expand its purchase of J-REITs to ?140 billion by this year and to ?170 billion by next year.
As was seen in the prior session, financial and real estate-related shares?the most direct beneficiaries from asset inflation because of the BOJ's monetary easing?are leading the market rally.
Mitsubishi UFJ Financial Group Inc. is up 5.7% to ?611, while Mizuho Financial Group Inc. gained 4.9% to ?216.
Daiwa Securities Group Inc. is leading big brokerages with a 7.3% advance to ?708.
Among consumer lenders, Credit Saison Co. is up 16% at ?2,789.
Bellwether property developer Mitsui Fudosan Co. surged 16% to ?3,400, while the TSE REIT Index jumped 7.9% to ?1,704.21.
Among ETFs, Daiwa Asset Management's Daiwa ETF-TOPIX unit added 5.2% to ?1,124, while Nomura Asset Management's TOPIX ETF also posted a gain of 4.9% to ?1,119.
Honda Motor Co. led major exporters with a gain of 3.4% to ?3,770.
The 10- and 30-year JGB yields fell to all-time lows of 0.315% and 0.925%, respectively, as market participants that were betting the BOJ would disappoint markets rushed to cover short positions.
"It's not that people want to buy JGBs today, it's that they have to buy," said Mizuho Securities strategist Teruyoshi Sotome. "The JGB market is finished."
Source: http://online.wsj.com/article/SB10001424127887323646604578403371927459796.html?mod=rss_world_markets
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