Nissan Motor shares rose by about 24%, their largest increase in at least 5 decades, on hopes that a potential alliance with Honda Motor will save the Japanese automaker from the financial crisis.
Nissan stock was the best performing stock in the Nikkei 225 index for Japanese stocks, as investors welcomed news of the potential merger of the troubled automaker, whose shares recorded their worst performance in 50 years under its current leadership.
Nissan shares rose 23.7% to 417.6 yen ($2.72) at the end of today’s trading.
Good news
“Given that Nissan is about to gain support from a stronger partner financially and operationally, this should be considered good news,” Julie Bott, a senior analyst at London-based research firm Pelham Smithers Associates Ltd, wrote in a note.
Honda is considering several options including a merger, capital alliance or creating a holding company, the company’s executive vice president, Shinji Aoyama, said following overnight reports of talks between the two automakers.
Shares of Mitsubishi Motors, said to be a potential participant in the deal, jumped 20% in their biggest rise since 2013.
Honda stock
In contrast, Honda shares fell 3.04% to 1,244.50 yen ($4.97), due to fears that it would have to bail out Nissan, and Tatsuo Yoshida, a senior analyst at Bloomberg Intelligence Research, said that the deal would not bring “short-term benefits” to Honda.
Mixed reactions were observed in the credit market, with Nissan’s dollar bond spreads shrinking by the most on record, while Honda’s credit default swap premiums rose, reflecting investor anxiety.
