Nikkei climbs as Softbank bounces back, pulls up banks
Published on Oct 16, 2012 9:43 AM
TOKYO (REUTERS) - Japan's Nikkei share average advanced 1 percent in early trade on Tuesday as index heavyweight Softbank Corp rallied after the company confirmed a US$20 billion (S$24 billion) acquisition of a U.S. competitor with a loan from four banks that also benefited from the news.
Softbank bounced back 9.2 percent after losing over 20 percent since rumours of the deal emerged last Friday, while three of the four banks sources say will lend Softbank funds for the deal - Mizuho Financial Group Inc, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group - gained between 1.7 and 2.5 percent in heavy trade.
"It's just clarity on the structure. People didn't know if they were going to have to pay higher than what was rumoured, they were concerned about dilution, and (Softbank CEO Masayoshi) Son came out and flat-out denied that," said a partner at a foreign hedge fund.
"But given how much it was sold, it's just a relief rally," Japanese equities were also given a boost after U.S. stocks moved up overnight as Citibank Inc's results came in stronger than expected, helping indexes recover from last weeks'heavy losses.
To continue reading, log in if you are a subscriber
Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!