Japanese Banks and Insurance Stocks Surge on 'Surprise' Easing Cutback

[Asia Economy Reporter Haeyoung Kwon] As Japan decided to revise its quantitative easing policy, financial stocks such as banks and insurance companies are showing strength.

According to NHK on the 20th (local time), the Bank of Japan decided to maintain the short-term interest rate at -0.1%, but change the fluctuation range of long-term interest rates from the previous 'around 0 to ±0.25%' to 'around ±0.5%.'

Financial stocks expected to benefit from future interest rate hikes surged collectively. The Japan TOPIX index, which tracks bank stocks, rose as much as 7.7% intraday, marking the largest increase since November 2016. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, Japan's largest banks, also surged more than 8% intraday.

Makoto Furukawa, Chief Economist at Mitsubishi UFJ Morgan Stanley Securities, analyzed, "Banks had been on a downward path due to the Bank of Japan's quantitative easing, but now the opposite situation is occurring," adding, "This will be beneficial for banks." Michael McDade, an analyst at Morningstar, said, "It is expected to prevent the decline in Japanese lending rates that had been undermining banks' profitability."

However, the Japanese stock market, which showed strength in the morning, is currently down more than 2% following the Bank of Japan's announcement of the revision to its quantitative easing policy. Concerns arose that the interest repayment burden on Japanese companies will increase and that profits of export companies, which had benefited from the weak yen, may decrease.

This content was produced with the assistance of AI translation services.