The strong rebound Monday in Tokyo share prices took analysts by surprise.
Few market players were prepared for the explosive rally that came close on the heels of news that Hokkaido Takushoku Bank had gone under, even though such a report would usually serve to demoralize a stock market.
The Bank of Japan's move to provide an emergency facility to the Hokkaido bank eased fears about the negative impact, brokerage officials said. The BOJ move, apparently prompted by the major commercial bank's failure, has erased the paralyzing uncertainty about the health of the banking industry, which is still saddled with the heavy burden of bad loans, they said.
Indeed, long-battered banking and financial issues staged a strong rebound along with internationally known blue chips, sending the Tokyo market sweeping ahead to its largest point gain this year. The benchmark 225-issue Nikkei average soared 1,200.80 points, or 8 percent, to end the day at 16,283.33. The gain was the eighth steepest on record.
Even skittish investors jumped on the buying bandwagon amid rumors that money from public funds will flow into the market at an accelerated pace, a brokerage analyst said. There was talk that public fund managers stepped up purchases in futures-related dealings, and the steep rise in index futures prices sent the cash market soaring, he said.
Analysts believe the market took the continued purchases by public fund managers as a sign of the government's resolve to support the beleaguered market.