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  • Japan Declares Virus Emergency for Tokyo Area Amid Record Cases
    Bloomberg

    Japan Declares Virus Emergency for Tokyo Area Amid Record Cases

    (Bloomberg) -- Japanese Prime Minister Yoshihide Suga declared a state of emergency Thursday for Tokyo and adjacent areas, trying to stem Covid-19 infections that hit a daily record in the capital.The declaration covers the capital and the surrounding prefectures of Kanagawa, Saitama and Chiba, Suga said, adding it will have an impact on the economy. It will be imposed from Friday until Feb. 7 and comes after the Japanese capital said it had found 2,447 cases of coronavirus Thursday, a record.Japan’s emergency doesn’t imply the kind of lockdowns seen in some parts of Europe, and the government is seeking far less stringent measures than under its previous emergency last year, which triggered the worst economic contraction on record.“The current wave of infections is worse than we had imagined, but we believe we can overcome it without fail,” Suga told a press conference. “To achieve that we have to ask you to accept restrictions on your lives.”Residents will be requested to avoid going out after 8:00 p.m. and bars and restaurants will be instructed to close at that time. Authorities can’t enforce compliance for now, though Suga is seeking to amend the law to add penalties for businesses that don’t abide by government measures, and formalize incentives for those that do. The government will press for a return to remote work, aiming to cut the number of commuters in the region by 70%.Suga announced subsidies of up to 1.8 million yen ($17,400) a month for eateries that comply with rules on shortened hours.Ballooning infections have been a blow for Suga, who had sought to restore growth despite the pandemic, including by offering domestic travel incentives to bolster the tourism industry. His public support has slumped, with polls showing most voters favor tougher pandemic measures.Bloomberg Economics’ Yuki Masujima sees the emergency declaration shaving up to 0.7% off the economy for each month it lasts. Tokyo and neighboring areas account for about one-third of the country’s gross domestic product. It’s also possible that other areas could be added to the state of emergency later, though Suga said no emergency was needed in Osaka at this point.“This increases the possibility of an economic contraction,” economist Yoshimasa Maruyama at SMBC Nikko Securities said of the emergency. “Suga wanted to wait until after the New Year’s holiday to make the declaration and that has put him behind the curve to limit the spread of the virus.”Even before Suga first hinted he would declare an emergency, the economic recovery was forecast to slow in the first three months of 2021, with companies scaling back investment and households opting to save more.The restrictions on activities are likely to hamper the effectiveness of the economic stimulus package Suga put together last month, which is to be funded by an extra budget. The package is no longer suitable in the current environment, Nomura Research Institute economist Takahide Kiuchi said in a research note.“The government should change the content of the third extra budget and change the course of economic policy in order to strengthen support for companies and individuals,” Kiuchi said.It will be the second emergency state in Japan after a declaration that began in April, but is not expected to cause as much pain as the first, when the virus and a broader shutdown slammed the brakes on the economy and sent it into its worst downturn.Suga’s signature “Go To” travel campaign, which had already been suspended through Jan. 11, won’t be revived while the state of emergency is in place. Schools, however, will not be asked to close and university entrance exams will go ahead as scheduled.Japan has had by far the lowest rate of infection of any Group of Seven nation, recording fewer cases in the past year than the U.S. has seen in recent days.(Updates with Suga comments in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Nintendo and Sony Shares Hit Records as Peak Holiday Season Approaches
    Bloomberg

    Nintendo and Sony Shares Hit Records as Peak Holiday Season Approaches

    (Bloomberg) -- Nintendo Co. had its biggest gain in more than a year in Tokyo on Thursday, as investors eyed demand for game consoles with the peak holiday season approaching.Shares in the Kyoto-based gamemaker rose 6.6%, reaching the highest level since December 2007, amid demand for its Switch console and a broader buying of Japanese gaming stocks. Sony Corp., which recently released its PlayStation 5 console, also reached a record, surpassing the 10,000 yen per share mark for the first time since 2001.“Investors have their attention toward game makers amid the recent coronavirus spread and the upcoming Christmas season,” said Ryuta Otsuka, a strategist at Toyo Securities Co.Videogame makers have gained almost across the board from the surge in stay-at-home stocks this year, with gaming a chief beneficiary of changing customer habits due to the coronavirus pandemic. Software makers Capcom Co. and Koei Tecmo Holdings Co. both hit new highs in Tokyo Thursday.Combined hardware and software sales in the home console market in Japan rose 5.5% in November compared with the same month in 2019, SMBC Nikko analyst Eiji Maeda wrote in a note on Monday. Coronavirus cases in Japan began to increase during that month, when the PlayStation 5 and Microsoft Corp.’s latest Xbox console were also both released. Tokyo was set to report a record 800 coronavirus cases on Thursday, local broadcaster NHK said.(Adds chart, close share prices throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Sharp Surges With Stock Set to Return to Japan’s Blue Chip Index
    Bloomberg

    Sharp Surges With Stock Set to Return to Japan’s Blue Chip Index

    (Bloomberg) -- Sharp Corp. will return to Japan’s Nikkei 225 Stock Average, replacing NTT Docomo Inc. and marking a comeback on Japan’s premier blue-chip index just four years after it was removed.The electronics maker will join the gauge on Dec. 2, Nikkei Inc. said in a statement. The unscheduled change comes as a result of Docomo’s impending delisting after parent Nippon Telegraph & Telephone Corp. succeeded in its $40 billion tender offer for the mobile unit.Sharp shares surged as much as 8.5% in early trading in Tokyo on Thursday, the most since August 6. The addition caps a turnaround led by Foxconn Technology Group, which took over Sharp in 2016 in a $3.5 billion deal following years of losses. Having expressed doubts about its ability to stay in business amid severe financing issues, it has been overhauled under Foxconn’s management and turned back to posting largely consistent profits.While the appointment is not completely out of the blue, with Sharp having been cited by analysts as a possible candidate, some were taken aback. Sharp’s market value of about $6 billion would place it in the bottom half of companies on Nikkei, with the stock closing Wednesday just 9% higher than when it was removed from the measure in 2016.“It’s a bit of a surprise, given that its profits had worsened for a bit and it wasn’t the leading candidate for the replacement,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities Co. “There were other major electronic maker names with large market caps that have been left alone.”Those names included Rohm Co., Anritsu Corp. posited by SMBC Nikko Securities, while Daiwa had raised Murata Manufacturing Co., Aisin Seiki Co. and Shimadzu Corp. as potential replacements. Shares of all of these candidates fell by at least 2%.Surprise InclusionsThe addition itself wasn’t surprising, but the deemed par value of 50 yen was, analyst Travis Lundy wrote in a note on Smartkarma. That could help lift Sharp’s shares more than other companies added to the index.“I would expect this to trade strong, then trade stronger,” he wrote. “ I would not be surprised to see it move 50%.”Docomo’s delisting was effectively confirmed on Tuesday, with NTT having succeeded in taking its stake to more than 90%, allowing it to squeeze out the remaining shareholders.With funds tracking the index needing to buy and sell to reflect the changes, and speculators seeking to profit in advance, Nikkei 225 changes are reliable events for volatility. That’s especially been the case given the increasing purchases of exchange-traded funds tracking the Nikkei purchased by the Bank of Japan in order to support the market. Components are usually replaced with highly liquid names from the same sector -- but there have been several surprise inclusions in 2020, in what’s been an unexpectedly active year for the index, largely thanks to the unwinding of so-called parent-child listings of publicly traded units.Game maker Nexon Co. surged after being added to the gauge in October, a surprise replacement for convenience store chain FamilyMart Co. after it was bought out by Itochu Corp. Japan Exchange Group Inc. replaced Sony Financial Holdings earlier in the year, after Sony Corp. took full control of the unit, while SoftBank Group Corp.’s mobile unit SoftBank Corp. was another eye-catching addition when it joined in September as part of the index’s annual review.Iida Group Holdings will replace Docomo in the Nikkei 300, while UT Group will take its place in the Nikkei 500.(Updates with Sharp share reaction in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.