Explaining Nintendo’s 10% Jump


Shares of Nintendo (NTDOY.PK) (7974) jumped 9.8% overnight in Japan, while the broader market (the Nikkei 225) was up a far more modest 1.4%, and as the yen remained stubbornly (relatively) strong at Y76.65 against the US$. What explains this big move? The Japanese business press is at a loss for the most part. The Nikkei says it was a rebound after recent heavy selling, i.e. it was oversold, and in fact Nintendo had just hit a 52-week (and multiple year) low on Friday. That’s a reasonable explanation. However, note that FISCO is reporting the Tokyo Exchange will make a friendly takeover offer for the Osaka Exchange (this development is not new news except that the two reportedly have finally come to an agreement for a merger allowing for the friendly TOB), which fueled expectations of Nintendo being included in the Nikkei 225 Stock Average; it is currently traded on the Osaka Exchange, among the very few with such a large market cap that is. This is a situation similar to when a company is added to the S&P 500 and receives a nice bump in share price.  So a little bottom fishing and index premium boost brings reprieve to Nintendo shareholders.  I am long Nintendo and looking to add more to my position. Please see my article discussing my investment thesis on Nintendo.