Japan’s TOPIX index closed at its highest level since August 1990 on Monday in expectation that the ruling Liberal Democratic Party (LDP) will retain power at the upcoming elections following Prime Minister Yoshihide Suga’s decision to resign as the party’s president.
“Many of the market participants that this author spoke with before the news was announced felt that a win by Fumio Kishida in the LDP presidential election would be better for the stock market than a win for Suga,” said Naka Matsuzawa, chief Japan rates strategist at Nomura, in a note.
“This was based on the view that, given Suga’s falling approval ratings, the LDP would be able to win more seats if it faced the lower house elections under a new prime minister,” he added.
The broader TOPIX index rose 1.3% to 2,041.22 points to close at its highest in over three decades, according to Reuters data.
The benchmark Nikkei 225 index also rose, going up 1.8% to close about 340 points short of the 30,000 points mark, last seen in early April 2021. The benchmark closed higher for a sixth straight session on Monday.
Japanese equities “undervalued”
“Many observers view an LDP victory in the lower house elections as an opportunity for the undervalued levels of Japanese equities to correct,” Matsuzawa explained in the note.
All sectors, except energy and utilities, rallied on Monday as reports emerged on Friday that the Tokyo Stock Exchange is considering lengthening trading hours by 30 minutes.
Meanwhile, the Japan Times reported that the island nation is planning to extend its COVID-19 state of emergency, originally set to expire on 12 September. Public approval rating for Suga had slumped to a low of 34%, according to a Nikkei poll, on the back of the pandemic-related state of emergencies and consequent economic downturn.
Automaker BYD shines
Across the East China Sea, Hong Kong’s Hang Seng index climbed 1% to 26,163.63 points and China’s CSI 300 index jumped 1.87% to 4,933.73 on Monday.
Automaker BYD was the top percentage gainer on the Hang Seng after the company said year-to-date sales of its new energy vehicle jumped by 193% in August compared to a year ago. Hong Kong-listed shares of BYD rose 7.3% on Monday.
WeChat owner Tencent Holdings and e-commerce giant Alibaba Group were among the top gainers on the benchmark, adding 3.5% and 1.9%, respectively.
Fortescue Metals trades ex-dividend
Elsewhere, Australia’s S&P/ASX 200 index closed flat on Monday ahead of the country’s central bank’s September moentary policy decision meeting due to be held on Tuesday 7 September.
Energy and mining sectors were the top losers on Monday, cancelling gains in financial and tech stocks.
Iron ore miner Fortescue Metals Group shed over 10% on Monday and was the biggest percentage loser on the benchmark index as the shares traded ex-dividend. Ex-dividend describes a stock that is trading without the value of the next dividend payment, according to Investopedia.
South Korea flat
South Korea’s KOSPI remained close to flat on Monday as index heavyweights Samsung Electronics and SK Hynix traded in opposite directions, with the former gaining 0.9% and the latter losing 0.9%.
In Southeast Asia, Singapore’s The Straits Times (STI) index rose 0.56% on Monday.
Meanwhile, bourses in Manila and Kuala Lumpur fell 0.3% and 0.5%, respectively.