Daiwa Securities Group Inc.’s credit rating outlook was raised by Moody’s Investors Service after Japan’s stock-market rally and cost cuts spurred a profit recovery at the country’s second-biggest brokerage.
The outlook on Daiwa’s Baa3 long-term rating was changed to stable from negative, Moody’s said in a statement today, two years after downgrading the Tokyo-based firm to the lowest investment grade as losses mounted abroad.
“Daiwa has benefited from a sharp recovery in earnings due to major changes in the environment and sentiment for the domestic market,” Moody’s said in the statement. “Daiwa’s success in reducing operating expenses and downsizing its overseas operations are additional, and equally important, factors for the recovery.”
Profits at Daiwa and bigger competitor Nomura Holdings Inc. soared in the six months ended September as Prime Minister Shinzo Abe’s economic-stimulus program bolstered investors’ appetite for local stocks. Both companies have been cutting costs that swelled as they pursued expansions overseas.