Tokyo Market Summary: Nikkei Average falls, Bank of Japan reduces government bond purchases, first long-term interest rate rise after YCC cancellation

Top news
Bank of Japan's monetary policy promotes normalization even if burdens increase on domestic companies - Liberal People, Mr. Ochi
Member of the House of Representatives Ochi Takao of the Liberal Democratic Party expressed the view that even if rising interest rates increase the cost burden on domestic companies, the Bank of Japan should focus on achieving the 2% price stability target and promote normalization of monetary policy. In an interview on the 10th, Mr. Ochi pointed out that domestic companies have been delayed in breaking away from pricing and employment practices in a deflationary environment.
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The Bank of Japan reduced government bond purchases, and the first long-term interest rate rose after YCC was lifted
The Bank of Japan announced a regular government bond purchase operation (open market operation) on the 13th. The planned purchase amount for the remaining period “5 to 10 years or less” is 425 billion yen, a 50 billion yen reduction from the previous 4/24 (475 billion yen). This is the first purchase reduction since the short and long interest rate operation (yield curve control, YCC) to suppress long-term interest rates was lifted in March. In response to this, the yield on new 10-year government bonds, which are indicators of long-term interest rates, temporarily set a high level of 0.940% for the first time in about 6 months since 2023/11.

Notable stocks
Toray is over 8% at one point to acquire treasury stock by halving policy holdings and selling them by the fiscal year ending 27/3
$Toray Industries(3402.JP)$It was announced on the 13th that policy holdings will be halved in 3 years from this fiscal year to the fiscal year ending 27/3. Approximately 100 billion yen will be reduced, and the full amount of the sale price will be used to repurchase treasury shares. According to the consolidated earnings forecast (international accounting standards) for the fiscal year ending March 25, which was announced at the same time, sales revenue is expected to increase 6.3% from the previous year to 2.62 trillion yen, business profit is expected to increase 31.6% to 135 billion yen, and net profit is expected to increase 269.9% to 81 billion yen.

Mitsui and others were sold to real estate stocks, and Bank of Japan government bond purchases were reduced, putting upward pressure on long-term interest rates
$Mitsui Fudosan(8801.JP)$Ya $Mitsubishi Estate(8802.JP)$、 $Sumitomo Realty & Development(8830.JP)$has been sold, and the “real estate industry” is at the top of the decline rate in the Tokyo Stock Exchange's industry-specific index. The financial results and dividend forecasts for the fiscal year ending 25/3 announced by Mitsui Futoshi Jisho after the end of trading on the 10th of the previous weekend are both forecasts for final profit increases, and Hishiji Jisho has disclosed the implementation of a stock repurchase. Sumitomo Fumio, who announced financial results on the 9th, is also planning a final increase in profit for this fiscal year. Meanwhile, long-term bond prices declined (long-term interest rates rose) due to concerns about deterioration in bond supply and demand due to reduced purchases. The yield on new 10-year bonds, which is an indicator of long-term interest rates, temporarily rose to 0.940%. Negative effects on the business environment due to rising interest rates were warned, and it seems that sales to real estate stocks were encouraged.

SUBARU temporarily falls by more than 5%, operating profit forecast for the current fiscal year decreased by 14.6%, research and development expenses and sales incentives increased
$Subaru Corp(7270.JP)$It was announced on the 13th that consolidated operating profit for the fiscal year ending March 31, 2025 is expected to be 40 billion yen, down 14.6% from the previous year. The increase in research and development expenses and sales incentives, and exchange rate effects were factored in. The company's operating profit forecast is above the average forecast value of 353.4 billion yen for 16 analysts compiled by IBES.
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SoftBank G is in full year deficit for 3 consecutive years - transition period from defensive to reverse offensive
$SoftBank Group(9984.JP)$On the 13th, consolidated financial results for the fiscal year ending 2024/3 were announced, and net profit and loss for the full year were in deficit for the third consecutive year. Meanwhile, the company's fund business, which had refrained from aggressive investment, had a surplus for the first time in three periods, and preparations for a reversal offensive are being prepared.

Honda stock price temporarily rose 6.9% to announce 300 billion yen share buyback
$Honda Motor(7267.JP)$rebounded for the first time in 7 business days. I added 1856 yen 50 yen, which was 6.91% higher at one point. A share buyback of 180 million shares, which is 3.7% of the number of issued shares (excluding treasury shares), was announced on the 10th, with an upper limit of 300 billion yen in value. Buyers that evaluate the positive attitude towards shareholder returns are gathering.

Distribution source: Reuters, Nihon Keizai Shimbun, MINKABU, Bloomberg