Roundup: Nikkei jumps 1.24 pct. on weak yen, hopes for PM's Cabinet reshuffle
TOKYO, Sept. 2 (Xinhua) -- The Nikkei stock index rallied 1.24 percent to a seven-month closing high Tuesday, as the yen's weakness against the U.S. dollar prompted buying, amid hopes for Prime Minister Shinzo Abe's Cabinet reshuffle and the possibility of the Government Pension Investment Fund (GPIF) being reformed.
The Nikkei 225 gained 192.00 points to finish at 15,668.60, while the broader Topix index of all first-section shares jumped 1. 09 percent, or 13.94 points, to close at 1,297.00.
Local traders said that favorable yen-U.S. dollar moves kept the market mood upbeat and saw investors chasing riskier assets, but they also noted that sentiment was positive ahead of Prime Minister Shinzo Abe's planned Cabinet reshuffle tomorrow.
Speculation is rife among sources close to the matter that Yasuhisa Shiozaki, a former Chief Cabinet Secretary to Abe during the prime minister's first stint at the helm, may be put in charge of the health, labor and welfare ministry, which oversees Japan's Government Pension Investment Fund (GPIF).
Sources close to Shiozaki maintain that he is in favor of shifting more of the bond-heavy fund's assets into stocks. The GPIF already plans to increase its holdings of domestic stock to more than 20 percent from its current 12 percent, ahead of median analysts' expectations for spending to increase the fund's holding to exactly 20 percent.
Local analysts believe that the GPIF's allocation to domestic stocks, will almost certainly be a boost for the market and its investors as it will strengthen domestic stocks and make issues here more attractive to overseas investors.
Yuji Saito, executive director of foreign exchange department at Credit Agricole, noted that market hopes for the Government Pension Investment Fund reform, helped prop up the Nikkei today.
As for currency moves and other factors moving the market, traders here said that the market got a boost from the yen's depreciation versus the U.S. dollar, which is a positive for exporter shares who see their profit outlook, earnings, competitiveness and profit yields repatriated from overseas, all boosted when the yen trades lower versus its major counterparts like the U.S. dollar.
The U.S. dollar climbed to 104.82 yen in Asian currency markets, marking its highest level since January, rising from 104.27 yen logged in European trade.
"The dollar-yen above 104 boosts stocks. Expectations for further government stimulus are resurfacing because the tax increase weighed on economic data. There's little chance the BOJ will actually add to stimulus, but hopes are rising a bit," said Hitoshi Asaoka, a senior strategist at Mizuho Trust