Shares in Japan’s third-largest bank, Sumitomo Mitsui Financial Group, or SMFG, fell 15 per cent this week, making the lender one of Asia-Pacific’s worst performers in what was otherwise a good week for the region’s stock markets.
The FTSE Asia-Pacific index rose for the fourth week in a row to narrow its loss for the year to about 1 per cent in a week that was shorter than usual in many markets because of holidays on Friday.
The Taiex in Taiwan gained 4.6 per cent to 5,782.0, the Sensex in India rose 4.3 per cent to 10,803.9 and South Korea’s Kospi advanced 4.1 per cent to 1,336.0.
SMFG sent a chill through the Japanese financial sector after saying on Thursday it lost $3.9bn during the financial year that has just ended – the worst result in six years – and could raise as much as $8bn by selling fresh shares, therefore diluting the value of existing holdings. SMFG ended the week at Y3,110, but was untraded on Friday because of a glut of sell orders.
Japan’s banks have already been forced to raise about $25bn to cover big losses on their stock portfolios. SMFG’s problems dragged down rival big banks whose earnings are more sensitive to share prices. Mizuho Financial lost 9.6 per cent on Friday to Y198, bringing its weekly loss to 3.4 per cent.
The Nikkei 225 Average gained 2.4 per cent over the week to end at a three-month closing high of 8,964.11, as investors anticipated the benefits of the Japanese government’s $154bn economic stimulus plan. It rose above 9,000 at one point on Friday.
Investors snapped up shares in consumer electronics groups amid expected subsidies for energy-efficient appliances and measures to encourage consumers to switch to digital televisions.
Exporters also benefited from hopes that the yen, which has depreciated by about 4 per cent against the dollar so far this year, would continue to weaken.
The best performing market in percentage terms this week was one of the smallest – Vietnam. The country accounts for just 0.03 per cent of world stock market capitalisation.
The State Bank of Vietnam unexpectedly cut interest rates, helping the Ho Chi Minh stock index to close at a five-month high of 325.1 or a weekly gain of 4.8 per cent.
The Ho Chi Minh index has risen 38.5 per cent since a four-year low in February. However, it is still only worth a quarter of the peak level reached two years ago.
Chinese shares made further gains, ending the week with a 1 per cent gain after a 2.7 per cent increase on Friday.
This left the Shanghai Composite index at a seven-month closing high and means it has now risen 34.2 per cent so far this year, amid increasing optimism about the outlook for the Chinese economy.
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