Japanese stocks surged to their highest level since October 2008 on Wednesday as news of the early departure of Bank of Japan Gov. Masaaki Shirakawa sent the yen tumbling to fresh multiyear lows, with Tokyo leading gains for other Asian stock markets.
Japan’s Nikkei Stock Average soared 3.9% in the afternoon session as the U.S. dollar breached the ¥94 level, which it hadn’t seen since May 2010.
The yen tumbled after Shirakawa said late Tuesday that he would step down from his post on March 19, a few weeks ahead of the expiration of his term to coincide with the departure of two deputy governors.
Analysts said the news likely means an accelerated and potentially more wide-ranging policy-easing plan will emerge from the Japanese central bank.
“The main take-away is that the timeline has shifted, and new policy steps are likely as early as the April 4 Bank of Japan meeting,” said BNP Paribas strategist Vassili Serebriakov.
“Candidates for the new governor will be presented in mid-February, and our Japanese economists point out that they all support additional easing by to a varying degree,” Serebriakov said.
Kim Eng Securities head of sales trading Andrew Sullivan said “the view is that the old guard at the [Bank of Japan] are not really behind huge amounts of easing.”
Sullivan said the early departure of the central-bank governor was an indication that Japan’s Prime Minister Shinzo Abe is stepping up pressure to ease monetary policy further.
“Abe needs to show [his deflation-busting] plan can work before the mid-year upper house elections,” said Sullivan.
Meanwhile, Capital Economics said after the news of Shirakawa’s departure date that they are now expecting the dollar to rise to ¥95 by mid-year “as investors’ appetite for risk continues to grow.”
They also tip the Nikkei Average to reach 11,600 by the end of the second quarter. The benchmark traded just below 11,500 late Wednesday. Read: Japan stocks high … and set to go higher
Rest of Asia mostly higher
Around the region, moves were more subdued, as Australia’s S&P/ASX 200 index and Hong Kong’s Hang Seng Index each advanced 0.8%
South Korea’s Kospi traded flat, as did the Shanghai Composite Index .
Data from Europe out Tuesday helped alleviate some of the worries over the health of the euro-zone economy that had sent Asia stocks lower in the previous session, as private-sector activity across the currency bloc in January shrunk at its slowest pace in 10 months.
Also supporting sentiment in Asia, U.S. stocks rallied Tuesday, helped by news that Dell Inc. will be taken private in a $24.4 billion buyout.
Europe-exposed banking heavyweight HSBC Holdings PLC rose 1.5% in Hong Kong, as banks gained generally, with Bank of China Ltd. up 1.3% and with Bank of Communications Ltd. ahead by 1.6%.
Gaming stocks tumbled, however, with Hang Seng Index constituent Sands China Ltd. falling 4.7% after reports that China is planning to crack down on some Macau gambling-junket operators allegedly linked to organized crime.
Elsewhere in the sector, MGM China Holdings Ltd. fell 5.8%, while Wynn Macau Ltd. dropped 6.9%.
Property firms were lagging on the Chinese mainland, with Gemdale Corp. down 2.3%, and Poly Real Estate Group Co. moving lower by 2.2%.
Japan banks, car makers climb
Bank shares jumped in Japan after the news of Shirakawa’s early departure, with Mizuho Financial Group Inc. climbing 5.2%, Daiwa Securities Group Inc. advancing 2.8%, and Shinsei Bank Ltd. jumping 7.7%.
“If the country gets inflation, then the banks are going to be in a good position to take advantage of that,” said Sullivan, adding that the situation would likely benefit bank margins.
In the auto sector, Toyota Motor Corp. rallied 6.3% as investors reacted to the top car maker’s 23% rise in quarterly profit and full-year forecast hike.
According to a Nikkei report, citing an executive at the auto maker, yen weakness will likely boost fiscal-year operating profit by around ¥140 billion ($1.5 billion).
The Japanese auto sector put in a generally strong performance Wednesday, with Subaru maker Fuji Heavy Industries Ltd. jumping by 5.5%, Isuzu Motors Ltd. also up 5.5%, and Honda Motor Co. higher by 3.6%.
However, South Korean rivals of Japanese car makers lagged, as yen weakness is thought to undermine their competitive position. Kia Motors Corp. fell 1.6%, while affiliate Hyundai Motor Co. traded down 1.7%.
In Australia, sectors that investors tend to turn to for higher yields were in the lead, with Sonic Healthcare Ltd. up 1.4%, while supermarket giant Woolworths Ltd. climbed 2.7%.
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