Tokyo Stock Exchange: Optimism before the probable partial lifting of the state of emergency

  •   12/05/2020 - 16h49
  •   DEHOUI Lionel

The Tokyo Stock Exchange closed higher on Monday, encouraged by the trend posted by Wall Street just before the weekend. But this observed rise is also the result of the possibility of an imminent lifting of the state of emergency. This will take place in part of Japan. However, it should be noted that the past week ended with a sharp rise in the Nikkei index. The latter provides information on the 225 main Japanese stocks.

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Tokyo Stock Exchange: Optimism before the probable partial lifting of the state of emergency
Image copyright: Dick Thomas Johnson - Flickr

The indices and the underside of the exercise

On Monday, the Nikkei continued its ascent, climbing 1.05% at the end of the session to 20,390.66 points. Following the Japanese Nikkei index, the expanded Topix index rose by 1.53% to 1,480.62 points. These different values were commented on by the Chief Strategist of Okasan Online Securities. In a note, Yoshihiro says investor morale is improving over time.

According to him, investors are hoping that the state of emergency will be lifted a little faster than expected. By the way, Japanese Economy Minister Yasutoshi Nishimura made an announcement this Sunday. He said in his statement that his country intends to lift the state of emergency in most parts of the archipelago. This will be done before the previously communicated date (31 May). Please be advised that this minister is managing the government's actions in the health crisis.


Important details

In addition, the Japanese government's plan for a waiver does not include mandatory containment or sanctions. This is valid even if there is a breach of the guidelines. However, the system would remain in force in other regions which are densely populated. It is therefore logical that the country's main economic lung, Tokyo, should be part of it. But we will have to see the evolution of values around the Nikkei.


Interesting market values

Practically all the sectors of activity related to the Nikkei closed the session on the way up. The exception came from sectors such as health and electricity (suppliers), but the ascent podium was well occupied. These include sectors such as finance, real estate, but also consumer durables. Bridgestone took +3.6% to 3,422 yen with its tyre business. Its reported after-closing net profit was down 65 percent in the first quarter of 2020.

It is therefore clear that the crisis has not spared the Bridgestone group despite its rise. The situation remains the same for its neighbour MHI (Mitsubishi Heavy Industries). This one is a conglomerate which progressed of +2,1 % to 2.742,7 yens. However, it also announced significant declines in its results for the fiscal year 2019-2020 at midday. Its results were sunk mainly because of its SpaceJet regional jet project.

Information: This is a very expensive project. The MHI Group did not fail to comment on its gloomy outlook for the financial year 2020-2021. It evokes as cause the health crisis caused by the coronavirus as well as the new loads envisaged on the SpaceJet.