Japan’s Nikkei Stock Average Erases Losses to End Higher on GPIF’s Stock Allocation Bets (UPDATE 1)

Reuters

12:30 JST, December 2, 2024 (updated at 17:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average reversed course to end higher on Monday, as investors scooped up equities on optimism that the nation’s largest pension fund GPIF may boost its holdings in stocks.

The Nikkei rose 0.8% to close at 38,513.02, after falling as much as 0.65% earlier in the session.

The Japanese government proposed to raise an investment return target for the Government Pension Investment Fund to 1.9% from 1.7%, paving the way for it to increase stock purchases.

“That raised optimism for stronger demand for stocks as GPIF may raise its weightings on Japanese stocks,” said Kentaro Hayashi, senior strategist at Daiwa Securities.

“Markets bet on the Nikkei index’s rise. So they bought back its heavyweight Fast Retailing.”

Uniqlo-owner Fast Retailing fell as much as 4.5% in early trade as it faced a storm of online criticism in China after a BBC report quoted the CEO saying that the company does not source cotton from the far western region of Xinjiang.

Fast Retailing pared most of its losses to end 1.33% lower.

The broader Topix jumped 1.27% to 2,714.72, with financials gaining on expectations that the Bank of Japan (BOJ) may raise interest rates at its policy meeting this month.

BOJ Governor Kazuo Ueda said the timing of the next rate hike was “approaching,” as the economy was moving in line with the central bank’s forecasts, the Nikkei newspaper reported on Saturday.

Insurers jumped 3.35% to lead the Tokyo Stock Exchange’s 33 industry sub-indexes, with Dai-ichi Life Holdings climbing 6.27%. The banking index advanced 2.75%.

A weakening yen also supported domestic shares. The yen was last down 0.37% at 150.31 per U.S$., after rising to 149.52 on the day.

Shiseido tumbled 6.6% to become the worst performer on the Nikkei after the cosmetic maker downgraded its profit outlook for the next two years on Friday, following a downturn in China sales. (Reporting by Junko Fujita; Editing by Savio D’Souza and Sumana Nandy)(caption)