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From Staff Reports
Japanese stocks rose today (Wednesday) – led by financial shares – after Citigroup Inc. said it will buy out the rest of venture-partner Nikko Cordial Corp., and because investors there believe the worst of the U.S. mortgage crisis is likely now over, according to Bloomberg News.
Earlier today the bellwether Nikkei 225 Stock Average rose 153.11 points, or 0.9%, to close at 17,199.89 – its highest level since July 31. Japan's broader Topix Index climbed 24.22 points, or 1.5%, to close at 1,664.01.
A sub-index that includes brokerage firms soared 5.6%, the best performance from all of the 33 industry groups in the Topix Index. Just last month, sub-indexes that follow brokerages, banks and consumer-lending firms were one of the Topix Index's four worst performers, due almost entirely to the U.S. subprime crisis.
No. 1 U.S. bank Citigroup Inc. (C) helped fuel yesterday's surge after announcing it would spend $4.6 billion buy the 32% of the Nikko Cordial Corp. brokerage firm that it doesn't already own – and at a 16% premium to its final traded price. Nikko is Japan's No. 3 brokerage firm by size.
Securities firms such as Nomura Holdings Inc. (Listed in the U.S. market as NMR, and a stock that's closely followed by analysts at both Money Morning and The Money Map Report) gained on the view more takeovers in the industry by foreign companies will follow. Nomura's shares rose 4%, while Nikko's rose 14%. Daiwa Securities Group Inc., the No. 2 firm, soared 5.8%.
"The Nikko Cordial case isn't something investors can ignore," Kiyoshi Ishigane, a money manager with Mitsubishi UFJ Asset Management Co. in Tokyo, told Bloomberg. "It has changed the view that Japan is a tough place for M&As, to a more positive one."
News and Related Story Links:
- Bloomberg News:
Japanese Shares Advance, Led by Nomura, Nikko Cordial, JFE.