Tokyo Electric Power Co. (9501) led a surge in the stocks of Japanese power utilities after the Liberal Democratic Party, which has championed nuclear power, won a landslide election victory yesterday.
Tepco, the operator of the tsunami-hit Fukushima nuclear station, jumped by its daily limit of 33 percent to 202 yen at the close in Tokyo, leading a 9.3 percent gain in the Topix Electric (1613) Power & Gas Index. Kansai Electric Power Co. (9503) rose 18 percent to 920 yen, also the daily limit and its biggest jump since at least Sept. 11, 1974. Tohoku Electric Power Co. (9506)advanced 15 percent to 857 yen.
Tepco Surges on Speculation Abe to Restart Nuclear
The Tokyo Electric Power Co. (Tepco) logo is displayed outside the company's headquarters in Tokyo, Japan.
The Tokyo Electric Power Co. (Tepco) logo is displayed outside the company's headquarters in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg
“Investors judge the result of yesterday’s election as a big step forward for the restart” of nuclear reactors, particularly Tepco’s Kashiwazaki Kariwa plant, said Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co. Kashiwazaki is “essential” for the utility to return to profit, he said, adding he was surprised by the size of the share moves today.
The LDP, led by former Prime Minister Shinzo Abe, took 294 seats in Japan’s 480-member lower house of parliament, public broadcaster NHK said today. Chairman of the LDP general council Hiroyuki Hosoda said on Nov. 27 that Japan must restart its nuclear reactors quickly because of the high prices for gas, coal and oil used to fire thermal power plants. Uranium mining companies in Australia also gained.
All but two of Japan’s 50 nuclear reactors are idled due to public safety concerns since a record earthquake and tsunami in March 2011 wrecked the Fukushima plant and led to the worst nuclear disaster in a quarter of a century. Outgoing Prime Minister Yoshihiko Noda’s Democratic Party of Japan said it would phase out nuclear power by the end of the 2030s after mass public rallies against restarting reactors.
Change of Policy
The change of ruling party should mark a change in nuclear policy, according to Kansai Electric’s Chief Executive Officer Makoto Yagi.
The Federation of Electric Power Companies, which includes Japan’s dominant nine regional utilities that own atomic plants, would like the new government to revise the nuclear energy policy of the previous administration, Yagi, who is also the chairman of the federation, said today in a statement.
Kansai Electric relied on nuclear for almost half its generated power in the year before the 2011 disaster. It reported a record first-half loss of 117 billion yen ($1.4 billion) after the shutdown of reactors forced the utility to import fuels for gas-, oil- and coal-fired plants.
‘Positive Sign’
Uranium producers Paladin Energy Ltd. (PDN) and Energy Resources of Australia Ltd. (ERA) also benefited. Perth-based Paladin rose 8.4 percent to 96.5 cents at the close in Sydney, its biggest gain in four weeks, and Darwin-based Energy Resources was up 5.1 percent at A$1.24, the most since Oct. 2. The S&P/ASX 200 Index fell 0.2 percent.
“You have a uranium sector that has been starved of any good news,” Troy Irvin, a Perth-based analyst at Argonaut Securities Pty, said by phone today. The landslide victory in Japan is seen by investors as a positive sign for the uranium market, and Paladin is the “best leveraged” of the companies Argonaut follows to a rising uranium price, Irvin said.
The uranium price has fallen 33 percent to $45.50 on Dec. 14 from $67.50 before the Japanese nuclear crisis, according to data compiled by Bloomberg. The price has gained 12 percent from a post-Fukushima low of $40.65 in November.
The LDP’s victory will be positive for electricity companies as the party supports nuclear power, Nomura Holdings Inc. (8604) chief economist Tomo Kinoshita and chief strategist Hiromichi Tamura said in a report today.
Regulator Approval
Any plans to restart reactors will need approval from the Nuclear Regulation Authority, which is investigating six nuclear facilities on concern that they sit on top of active fault lines. Under Japan’s guidelines for nuclear plants, active faults are defined as those that have moved in the past 120,000 to 130,000 years, the NRA said Oct. 23 in a statement.
Geologists this month pronounced that the Tsuruga nuclear plant operated by Japan Atomic Power Co. may lie on top of an active fault line, which would require the station to be decommissioned. Japan Atomic, whose second-biggest shareholder is Kansai Electric, dismissed the findings. Tepco is the biggest shareholder.
Noda’s government had approved the resumption of just two reactors in Japan, both at the Ohi station in northwest Japan, since the disaster in Fukushima. The restart attracted weekly protests by tens of thousands of people outside Noda’s official residence. Both the Ohi and the Tsuruga stations are located inFukui prefecture, nicknamed the ‘Nuclear Ginza’ for housing 13 reactors, the highest concentration in the world.