Japanese stocks may rise for a second day, with the Topix Index poised for its biggest monthly gain since February, on prospects Japan’s incoming Prime Minister Shinzo Abe will do more to weaken the yen and combat deflation after appointing his cabinet today.
Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, may be active. Hokkaido Electric Power Co. may draw attention after it was reported the utility will apply for a rate increase. Asahi Group Holdings Ltd. may be active on a report the beverage maker’s operating profit may miss the forecast.
Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in March were bid in the pre-market at 10,100 in Osaka, at 8:05 a.m. local time. The Nikkei advanced 1.4 percent to 10,080.12 yesterday. Equity markets in Hong Kong, Australia and New Zealand are closed today for holidays.
“Market expectations are on the rise for the new government as it beefs up efforts to beat deflation and revive the economy,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “I expect overseas investors to buy shares as they return from the Christmas holiday.”
Abe, whose Liberal Democratic Party won a landslide victory in the Dec. 16 election, is scheduled to appoint a cabinet today after the lower house names him prime minister.
Gains in Japanese stocks may be limited as Asahi is among the 127 companies in the 1,678 member Topix prepared to go ex- dividend today, meaning investors who buy the shares today won’t get a year-end dividend.
The MSCI Asia Pacific Index (MXAP) gained 13 percent this year as of yesterday as U.S. and Chinese economies showed signs of recovery and central banks around the world took action to shore up growth. The Asian benchmark trades at 14.6 times estimated earnings on average, compared with 13.8 times for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index. The Shanghai Composite Index advanced 2.5 percent yesterday, erasing this year’s loss.
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