Japanese Financials Surge as the Nikkei Roars Higher
Stocks are off to a great start here in the U.S., but Asia's markets are tearing up the script to start the new year. Japan's markets have surged in particular, buoyed by stimulus measures from the new Japanese government that have pushed down a strong yen as exports struggle. For its own part, the Nikkei has rocketed up in early 2013, and the index has pulled in another 1.9% gain in the past week. Let's get caught up on the market news you need to know from across the Pacific.
All aboard the Nikkei rally train
The latest rally has the Nikkei on a 12-week upswing, and the index has hit a new 33-month high. Something's going right in Japan: While profits haven't been surging during earnings season at Japanese companies, the outlook for 2013 sure is bright. Nissay Asset Management's chief portfolio officer, Jun Nishizaki, put it succinctly by telling Bloomberg, "Profits are not that much higher this year than the last, but we're expecting a 20 percent increase in profits in the next year." Stimulus measures meant to bolster the financial community and improve exports could bring in big wins for investors, particularly if the U.S. economy picks up to support said exports. The yen's hovering around its weakest point against the dollar since mid-2010, and the ongoing stimulus should help it continue to fall.
Nomura Holdings' projections support a resurgence in the Japanese financial community. The company expects its investment-banking arm, a recent weak spot in the company, to make waves this year. Given the Nikkei's rise, Nomura expects companies to invest more in markets in order to capitalize while the going's good. Nomura's stock hasn't been doing too shabby itself: Over the past week, shares of the financial giant have roared up by more than 4%. Even though the company's quarterly report missed expectations this week, earnings still jumped by 13%. CEO Koji Nagai has stated his intention to restore the bank's reputation after last year's insider-trading scandal, and if the recent rally keeps up, he might just make good on that promise.
Nomura's not the only financial company in Japan making moves. Mizuho Financial Group has exploded, with shares gaining 4.2% over the past week, buoyed by a strong quarterly earnings report. The bank's quarterly profit soared, and net income for the past nine months has risen 45%, according to the company. Mizuho's lending has done particularly well recently, with lending profit up nearly 6% year over year in the last quarter. Mizuho offers a strong 3.6% dividend yield at a relatively cheap payout ratio of just 11%, and if it keeps up this trend, it could be a star for income and growth investors alike.
Unfortunately, not every stock's getting in on the Nikkei's rise. Game companies in particular have been slammed this year: Both Nintendo and Konami have posted significant losses to start 2013, with shares down 10.2% and 9.1%, respectively, in January. Sales of Nintendo's Wii U gaming console haven't impressed investors recently, and the company recently slashed its sales outlook for the year from 5.5 million consoles to just 4 million. Meanwhile, Konami's trading at dirt-cheap price-to-book valuations, and with a fairly diversified portfolio of subsidiaries outside of just video games, the beaten-down stock may be able to capitalize on Japan's stimulus to get its shares back into green territory.
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The article Japanese Financials Surge as the Nikkei Roars Higher originally appeared on Fool.com.Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Nintendo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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