Nikkei rises as trade jitters ease, banks weakened by low rates and bad debt

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FILE PHOTO: People walk past an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, March 23, 2018. REUTERS/Toru Hanai

Nikkei rises as trade jitters ease, banks weakened by low rates and bad debt
Nikkei rises as trade jitters ease, banks weakened by low rates and bad debt
Reuters | Jun 20, 2018 11:20PM ET

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Nikkei rises as trade jitters ease, banks weakened by low rates and bad debt
By Ayai Tomisawa

TOKYO (Reuters) – Japan’s Nikkei share average rose on Thursday morning as investor jitters over trade issues that hit markets early this week appeared to recede, while technology stocks rallied on the Nasdaq strong performance overnight.

The Nikkei index (N225) rose 0.8 percent to 22,734.28 at the midday break.

“The market has calmed down a little bit as most investors think that trade tension would not escalate further from there… U.S. and China would be both hurt if they keep going like that,” said Torus Kobayashi, executive director at wealth management at UBS Securities.

Market participants focused on the Topic’s recent underperformance against the Nikkei which they attributed to weakness in banks, which have large weighting on the Topic.

The broader Topic (TOP) lagged the Nikkei, rising only 0.3 percent, spiking the so-called NTH ratio <.NTIDX> to 12.94, its highest level since 1999.

The banking sector <.IBNKS.T>, which dropped 1.3 percent and was the second worst sectoral performer on Thursday, has shed 15 percent since the beginning of the year as the Bank of Japan’s negative interest rate policy has undermined lending. Moreover, the sector was hurt by a report in the Nikkei newspaper stating that mega banks’ cash advances to card holders at annual interest rates of 2-14 percent are piling up irrecoverable debt.

The Nikkei said that bad debt tied to such cash advances climbed 13 percent to a six-year high of roughly 140 billion yen ($1.27 billion) in fiscal 2017.

Sumitomo Mitsui Financial Group (T:8316) dropped 1.8 percent, Mitsubishi UFJ Financial Group (T:8316) fell 1.3 percent and Mizuho Financial Group (T:8411) shed 0.7 percent.

Tech shares gained ground. TDK Corp (T:6762) surged 2.2 percent and Sumac (T:3436) advanced 1.8 percent.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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