Japanese shares seen as benefiting from the 2020 Olympics surged too far, too fast after Tokyo won hosting rights, with the rally outweighing the estimated economic impact, according to Shinkin Asset Management Co.
About 13 trillion yen ($131 billion) was added to the market capitalization of the Topix index last week after the city’s winning bid was announced, data compiled by Bloomberg show. One-third to half the gains were from investors trading on the Olympics news, Shinkin Asset said. The Tokyo Metropolitan Government projects the event will boost Japan’s economy by 2.96 trillion yen in the next seven years.
“People were surprised Tokyo got it after reports Madrid might win, so the reaction was big,” said Naoki Fujiwara, Tokyo-based chief fund manager at Shinkin Asset, which oversees about $6 billion. “Investors bought shares without thinking of how much impact the games would have on companies’ profits.”
The Topix climbed 3.7 percent in the two days after Tokyo’s selection. Shares had fallen on Sept. 6 after Spanish newspaper El Mundo said Madrid was set to win the hosting rights.
Gauges (TPX) tracking builders, developers, service industries, airlines, logistics stocks, steelmakers, machinery companies and cement producers listed on the Topix added a combined 4.9 trillion yen in market value last week, data compiled by Bloomberg show. That’s about 37 percent of the total increase.
Source: The Corliss Group, Stocks Surge Past Economic Benefit on Tokyo Olympic Pick