TOKYO – Japan’s Nikkei 225 index reached a six-month high on Friday, while the broader Topix index reached its highest level since 1990, extending their bull run since the end of August on hopes for a new government and further earnings growth.
The news that US President Joe Biden and his Chinese counterpart Xi Jinping had a phone conversation bolstered the rally by assuaging concerns about simmering Sino-US tensions.
The Nikkei average gained 1.25 percent to 30,381.84, marking the ninth session of gains in the previous ten. It was up 4.3 percent for the week.
The Topix increased by 1.29 percent to 2,091.65.
After unpopular Prime Minister Yoshihide Suga offered to resign last week, investors hoped that a new leader of Japan’s dominant ruling party would compile an economic stimulus and secure a decisive election victory.
Expectations are growing that vaccine minister Taro Kono will be elected leader of the Liberal Democratic Party later this month.
“Kono’s victory is starting to be priced in the market. He is relatively young and has the potential to form a long-lasting government “Shingo Ide, chief strategist at NLI Research, agreed.
Japan’s corporate earnings outlook has also improved recently, as the country’s vaccine roll-outs catch up with those of other developed countries.
Financial sectors were among the top gainers after SBI Holdings announced an unsolicited bid to buy a near majority stake in Shinsei Bank in order to gain effective control of the lender.
SBI gained 7.6 percent, while Shinsei Bank gained 20.8 percent after being untraded for much of the day due to a glut of bids.
Eisai, on the other hand, fell 8.7 percent after Biogen Inc shares fell after the company said the launch of its Alzheimer’s drug, which the two companies developed together, would be delayed longer than expected.
Nipro fell 7.7 percent after the medical equipment company announced the sale of 30 billion yen ($273.47 million) in convertible bonds, which could result in a 13% dilution. (1 dollar = 109.70 yen)