Japans Nikkei average rose 0.5 percent in active trade on Friday to its second three-month closing high in as many days, though banks tumbled as worries about their shareholding losses reignited. After days of see-saw trade, the benchmark ultimately marked gains of 2.4 percent on the week for its fifth successive week of rises, its best such run in nearly a year.
Sumitomo Mitsui Financial Group, Japans third-largest bank, went untraded due to a glut of sell orders after it said it faces a net loss of $3.9 billion for the financial year just ended and will raise as much as $8 billion through the sale of shares.
Japanese banks have been battered by losses on their massive stock portfolios, forcing them to raise around $25 billion already, and the news from SMFG could be a bleak omen for bigger rivals that are more sensitive to declines in share prices. But electronics firms such as Sony Corp continued to draw support from a $154 billion economic stimulus plan outlined by the ruling Liberal Democratic Party the previous day that prompted hopes of revived consumer spending, along with a weak yen trend.
"Theres some worry that other banks will end up in the same situation as SMFG," said Hiroaki Kuramochi, equity manager at Tokai Tokyo Securities. "And with so many foreign investors off today for the Easter holidays, its hard to know what will happen over the long weekend. So a lot of investors have been lightening their portfolios." Many major centres are closed on Friday for the Easter holiday, and some are closed on Monday as well.
But other market players said prospects for any sustained losses appeared slight given the brightening prospects for the global economy. "The Nikkei hit a good level, rising just above 9,000 yen, and this combined with the long weekend is prompting investors to take profits," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"Overall, it seems that US banks may be pulling themselves together and things seem to be coming together for automakers there as well. This will reassure Japanese investors." The benchmark Nikkei rose 48.05 points to 8,964.11, hitting a three-month closing high for the second day in a row. Its five straight weeks of gains is a run unseen since a seven-week rising streak that ended in May 2008.
The broader Topix rose 0.5 percent to 845.97. US stocks jumped the previous day as Wells Fargo said it expects to report a record quarterly profit, strengthening hopes that deterioration in the financial sector was abating. Though financial shares were strong throughout Asia, the news about SMFG meant there was little joy for banks in Japan.
"It reminded investors that Japanese banks have lots of unrealised losses on their hefty equities holdings and that they may need to increase loan-loss reserves as the economy is stumbling," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. Mizuho Financial Group, Japans second-biggest bank, tumbled 9.6 percent to 198 yen.
But some banks pared their losses by the close, with top lender Mitsubishi UFJ Financial Group down 1 percent at 517 yen. SMFG had a price quotation of 3,110 yen, down 13.9 percent or by its daily limit of 500 yen, though it remained untraded throughout the day because of a glut of sell orders.
But the trend towards a weaker yen and continuing expectations that the economic stimulus plan will encourage buying of eco-friendly appliances and spur consumer spending helped bolster shares of electronics makers. Sony rose 4.2 percent to 2,585 yen and Canon Inc climbed 2.9 percent to 3,180 yen. Panasonic Corp rose 3.3 percent to 1,323 yen. Fast Retailing bucked the trend to fall 7.6 percent to 10,750 yen as investors locked in profits on its rally over the past month.
The owner of the Uniqlo casual clothing chain lifted its annual forecast on Thursday for a second time. But speculators who had chased Fast Retailing on its strong business outlook decided the rally in its shares had run its course. Trade was extremely active, with 3 billion shares changing hands on the Tokyo exchanges first section. Declining shares outpaced advancing ones by 832 to 768.