Nomura’s embattled investors have something to cheer about after the brokerage unveiled plans to buy back more shares and posted its biggest overseas quarterly profit in seven years.
Bloomberg News reports that shares of Nomura jumped 13%, the most since December 2008, at the close of trading in Tokyo on Friday. The stock extended gains after the Bank of Japan expanded its stimulus program. The securities firm will purchase up to 2.6% of its stock for as much as $430m, it said Thursday after reporting first-quarter net income that fell less than analysts estimated.
Nomura’s first quarterly profit abroad in a year and a boost in fixed-income trading helped to temper a slump in its domestic brokerage business. That provides some solace to shareholders who saw the stock plunge 39% this year to Thursday after overseas losses mounted and results at home began to falter as negative interest rates and a surging yen kept individual investors on the sidelines.
The decision to buy back shares was “well-balanced” since Nomura is trading at just over half the book value of its assets, said Koichi Niwa, a senior analyst at SMBC Nikko Securities. “The global market became accustomed to negative rates, and its fixed-income businesses returned to form. But we don’t know whether that’s sustainable.”
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