Japanese shares may catch up with overseas markets as possible stock sales by Mitsubishi UFJ Financial Group Inc. and Hitachi Ltd. remove uncertainty that has reduced investor appetite, said Monex Group Inc.

Mitsubishi UFJ plans to sell common stock valued at 1 trillion yen ($11 billion) to boost capital, the Nikkei newspaper reported Nov. 14, while Reuters said Hitachi may raise as much as 400 billion yen through the sale of new stock and convertible bonds.
“The bad news is running out for the Tokyo market,” said Makoto Haga, chief strategist at Monex, a Tokyo-based brokerage. “As excess concern about share sale eases, Japanese stocks will likely start to catch up with other markets.”
Haga said if Mitsubishi UFJ and Hitachi do sell stock, this may hold their shares down in the short term.
The Japanese stock market has lagged behind its U.S. and European counterparts on concern companies would sell shares to restore capital battered by the deepest global recession since World War II. This month, Nippon Yusen K.K., the nation’s biggest shipping line, and NEC Corp., Japan’s top maker of personal computers, revealed plans to issue new shares.
The reported stock sale for Hitachi, Japan’s biggest electronics maker, would be the first in 27 years and dilute the value of existing shareholders by about 30 percent, Reuters said.
Masahiro Takahashi, a spokesman for Hitachi, said nothing has been decided. Takashi Takeuchi, a spokesman for Mitsubishi UFJ, declined to comment on whether the bank will announce a share sale.
Japan shares
Japan’s benchmark Topix index has lost 10 percent in the past three months, while the Standard & Poor’s 500 Index in the U.S. and Europe’s Dow Jones Stoxx 600 Index have added more than 7 percent. Mitsubishi UFJ, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., Japan’s biggest listed banks, were among the heaviest drags on the Topix.
The panel that oversees the Basel Committee on Banking Supervision agreed on Sept. 6 that lenders should raise the quality of their Tier 1 capital, which measures their ability to absorb sudden losses, the group said. The source of the reserves should be common share sales and retained earnings, it said.
Mizuho would need to raise 1.37 trillion yen if regulators require banks to have 6 percent of core Tier 1 capital, Goldman Sachs Group Inc. said in a Nov. 5 report. Sumitomo Mitsui would need to raise 328 billion yen at the same level, Goldman said.
(Source: Bloomberg)