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Business trends

Earnings releases before the opening bell gain steam in Japan

Companies increasnigly see it as an effective way to sway investors

Nippon REIT Investment put out its earnings results at 8:30 a.m.

TOKYO -- A growing number of Japanese corporations are choosing to announce their earnings early in the morning as they hope to deliver positive news to investors before the market opens.

Nishimatsu Construction is one of the nine companies that have done so since the beginning of the year. The general contractor on Feb. 10 released its earnings at 9 a.m., instead of the usual 2 p.m. "We want investors to use the information effectively from day 1," said an official in the public relations department. The company, which upgraded its earnings outlook for the fiscal year through March, saw its stock price temporarily rise 4% that day.

Taiyo Holdings issued its numbers at 8:20 a.m. The major manufacturer of special inks said that the board meeting to review earnings was held two hours earlier than the usual 9 a.m. to accommodate the early release.

A disclosure early in the morning, before the day's news starts coming in, is more effective in swaying investors.

Nippon REIT Investment announced its results for the year ended December at 8:30 a.m. on Thursday. The goal of the early-morning disclosure was "to ascertain the first reaction" to results and earnings forecasts, according to Kiyoshi Kondaibo, executive vice president of Sojitz REIT Advisors, which provides asset-management services for Nippon REIT.

Asgent, which provides network security solutions to businesses, released its earnings at 9 a.m. on Feb. 10.

The Tokyo stock market is sucestible to the previous day's movements in the U.S. and European markets. Earnings released early in the morning in Japan are incorporated into stock prices before information from overseas has an impact, so companies and investors are able to more easily gauge the market's reaction to earnings results.

"I welcome this because I can look at each one carefully," said Masafumi Oshiden at BNY Mellon Asset Management Japan. "This will also lead to work reform" since earnings news conferences will be held earlier as well, he added.

A stock analyst said that when earnings are disclosed early, he does not have to work until late at night analyzing the results or writing reports. In the U.S. and Europe, companies usually announce their results early in the morning or during trading hours.

Meanwhile, some are concerned about the trend. "There is a risk that stock prices will overreact to earnings numbers superficially," said Ichiro Yamada, general manager of equities at Fukoku Mutual Life Insurance.

Most of the companies that have put out their results in the morning this year have had strong earnings. Whether they will continue to do so even when business is not good will reveal how serious they are about information disclosure.

(Nikkei)

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