Reports showing rising consumer spending in Japan and South Korea helped fuel stock buying in both countries on Friday, with Japan's benchmark stock index closing at a nearly 5.5-year high. Key Japanese stock index got a boost from improved earnings for electronics giant, Sony.
Japan's benchmark Nikkei stock index racked up its biggest one-day percentage gain in more than three years. It surged nearly 570 points, a 3.6-percent jump. That put the index at its highest close since early September of 2000.
The Nikkei gained nearly five percent for the week, in the process winning back all of last week's heavy losses caused by the criminal investigation of the once-high-flying Internet enterprise, Livedoor.
Ira Hata, president of Tokyo investment firm A.C. Holdings, says investors who bailed out of smaller, speculative technology stocks during the Livedoor shock put their money into blue chips this week. "They're taking advantage of this recent situation to go in and purchase some good-value stock at an extremely low price," said Hata.
Also propelling Friday's gains were the yen's fall against the U.S. dollar and demand for financial and other issues related to consumer and business spending.
A.C. Holding's Hata says stock buyers realize that the Japanese banks they once shunned are increasingly attractive as Japan's financial sector expands in Asia. "The Japanese financial market has realized that there's more to this world than just Japan," he said. "And they're looking to China and other parts of Asia to grow, therefore those who are following them closely are seeing that their near-sightedness has grown beyond the Japanese borders."
Earlier in the day the Japanese government issued a report showing consumer prices rising for a second straight month in December. Analysts say that is a sign rising spending is helping the country overcome seven years of deflation.
Sony was the most active issue by value Friday, surging more than 14 percent, after it reported a 47-percent jump in quarterly profit and raised its full-year outlook to a profit from a loss. Strong showings by other electronics makers also contributed to the rally.
In South Korea, the benchmark KOSPI index gained 2.3 percent with heavy buying from foreign investors. In Hong Kong, the Hang Seng index climbed 1.5 percent.
Missing out on the rally were stock markets in mainland China and Taiwan, which were closed Friday for the Lunar New Year.