Nikkei 225
The Nikkei 225 index rose by more than 1 per cent as the market remained optimistic about the slowing number of new infections. The market also reacted to news that the country was making plans to lift coronavirus emergency at the end of the month. Still, there are worries about a new rule to limit foreign investments in half of listed companies.
Foreign investors are important for all countries. However, Japan is mulling a rule that will limit foreign investments on some industries it views as being core for its national security. The new rules contained in the Foreign Exchange and Foreign Trade act will require some investors to report in before they invest 1 per cent stake in about half of all Japan-listed firms. Previously, the investors were only required to report a stake worth more than 10%.
These rules, which will start applying on June 7, will apply to companies in core industries like nuclear power and defense, noncore industries like broadcasting and transport. Some of the prominent companies that will be affected are Toyota, Softbank, and Sony. According to Japan Times, the new laws will affect more than 1,500 publicly listed companies.
The Nikkei 225 index also rose because of hopes that the country will start to reopen soon. According to Yasutoshi Nishimura, the country’s economy minister, the country will reopen as many as 34 prefecturers at the end of this month. Still, the challenge is that Osaka and Tokyo, which are the most important prefectures, are still seeing rapid spreading of the disease. Another concern is that the country will take a while to recover.
Most Japan stocks were in the green today. Alps Electric, Nippon Sheet Glass, ANA, and Isuzu Motors were the best-performing companies in the index. On the other hand, the worst performers were Nomura, Shionogi, and Chugai Pharmaceuticals, which dropped by more than 2%.
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The Nikkei 225 index rose to an intraday high of ¥20,517 as bulls remained in control. On the daily chart, the index has remained above the 50% Fibonacci retracement and above the 50-day and 100-day exponential moving average. The index may continue rising as bulls attempt to retest the important resistance level of ¥20,573, which is at the intersection of the pink resistance and the upper side of the channel.
On the flip side, a move below ¥20,000 will signal that there are more sellers in the market who may be keen to push the price lower.