KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Hokuhoku Financial Group: Strongest-Performing Japanese Bank Eyes BOJ Outlook With Short-Term JGB Strategy
Key Takeaways:
Hokuhoku Financial Group shares are up 95% YTD, the best among Japanese banks in the Topix Banks Index.
Management expects the Bank of Japan (BOJ) to raise rates in October or December, positioning its portfolio toward short-dated JGBs to mitigate rate risk.
Net income for FY2024 was ¥39.1 billion, the highest since FY2007, underpinning expectations of stronger shareholder returns.
Strategic execution of synergies from its 2004 merger remains a key investor focus.
Positioning for Higher Rates
Hokuhoku Financial Group Inc., the top-performing Japanese bank stock in 2025, is shifting its securities portfolio toward short-dated Japanese government bonds (JGBs). President Hiroshi Nakazawa anticipates a BOJ rate hike later this year, in line with increasing analyst forecasts of an October or December move. By holding shorter-duration JGBs, Hokuhoku aims to reduce mark-to-market volatility and hold bonds to maturity without realizing losses.
The group’s securities book stood at ¥2.3 trillion as of June, of which ¥1.5 trillion was domestic bonds. This strategy highlights how regional banks, which must hold JGBs for liquidity and collateral needs, are managing duration risk in anticipation of policy normalization.
Earnings and Investor Appeal
Hokuhoku delivered net income of ¥39.1 billion in FY2024 — the strongest since FY2007 — supported by improved margins and stable loan demand. The bank’s stock has gained 95% year-to-date, reflecting investor optimism around its earnings recovery, balance sheet management, and potential for higher shareholder returns. Analysts, including those at SBI Securities, highlight both earnings growth and active management under Nakazawa and Deputy President Yuji Kanema as key drivers of performance.
Consolidation and Synergy Focus
Formed in 2004 through the merger of Hokuriku Bank (Toyama) and Hokkaido Bank, Hokuhoku was one of the early consolidators in Japan’s regional banking landscape. However, integration has historically been slow, underscored by the fact that the two trading teams only began operating on the same floor in Tokyo in recent years. Investors remain keen to see faster realization of cost and operational synergies, especially as demographic headwinds — including shrinking local populations and aging communities — put pressure on regional lenders to consolidate further.
Strategic Outlook
Hokuhoku’s focus on short-term JGBs offers protection against BOJ-driven yield volatility, while its earnings momentum and strong capital position make it one of the sector’s most attractive names. However, execution risk remains: achieving merger synergies and managing recruitment in a tight labor market are key challenges.
Investment View: Hokuhoku’s combination of earnings momentum, balance sheet prudence, and exposure to BOJ policy shifts positions it well among Japanese regional lenders. With shares at a 15-year high and valuations supported by strong fundamentals, the bank remains a compelling play on Japan’s ongoing monetary policy normalization.
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