Published On: Thu, Apr 11th, 2013

Nikkei hits highest level in 5 years

The Nikkei opened on Thursday morning and continued to make staggering gains on the back of last week’s confirmation of an unparalleled move from the Bank of Japan. The central bank has been tasked by the country’s Prime Minister, Shinzo Abe, to achieve a 2% rate of inflation by 2015 after more than two decades of deflation, undermining any and all attempts made by the country for economic growth.

The Nikkei 225, which is famed for its unknown criteria for inclusion, had risen 1.3% by mid-morning trading, resting at 13,458.60 at the time of writing. Earlier in the day the index had hit 13,496.28, representing the highest average weight of stocks included in the group since July 2008. Many analysts have suggested that the improved situation in the US markets had “underpinned” the markets growth in Japan, although there is no doubt that the Bank of Japan’s quantitative easing programme had propelled the Nikkei to its current heights.

One of the surprise packages of the day was Mitsui Fudosan Co which made gains of 2.5%, leading Mitsubishi Estate Co and Mitsubishi UFJ Financial group at the top of the days advancers in the automotive industry who added 2.1% and 2.4% respectively. The gains were made on the back of speculation that continued weakening of the Yen will see new car sales rise. This trend is expected to be mirrored among most exporters, of which cars are Japans biggest with 13.8% of the country’s total export value.

These advances were not a unexpected and speculation about the possibility of a stimulus package has been ongoing for some time, helping the Nikkei advance by more than 50% since November. With the Yen falling to 100 to the dollar and repeatedly setting new record lows of late, some analysts feel that the package was almost inevitable.

The effects have been somewhat widespread, with the rest of Asia also seeing gains in the early stages of the days trading. Shares in Hong Kong’s Hang Seng index preparing to open 0.7% up from the close of trade on Wednesday. While these gains have also been partly attributed to a 3.3% rise in the stocks of Shenhua Energy Co Ltd, China’s biggest coal producer, many investors feel it’s little more than a knock on effect of the current rally taking place in Japan.

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- Gregory previously worked for a leading financial news publication and is now assistant news editor of