The Yen Helps Sumitomo Mitsui Financial Group Soar To New 52-Week Highs

Reacting positively to Japan’s central bank’s move to changes in its funds rate, Sumitomo Mitsui Financial Group blasted upward to a new high for the year. As the yen strengthened on the news, investors found reasons to buy the big Chiyodo-based bank.

The bank changed its “yield curve policy,” a bond person term meant to describe the difference between short-term and long-term interest rates. With the new framework, it’s now possible for yields on the 10-year to climb higher, an indication of Japan’s concerns about inflation.

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The upshot is that traders took the yen higher on the belief that the currency can stabilize under these conditions.

That’s the back story to the Sumitomo Mitsui Financial Group’s blast upward: investors figure that’s where money now belongs given the Japan central bank’s moves. A stronger yen apparently is good for the bank’s earnings statements. The daily price chart for Sumitomo Mitsui looks like this:

Note how the buying volume seems to have picked up in the day or 2 before the yield curve policy announcement. There’s nothing magical about the 50-day moving average (the blue line) crossing above the 200-day moving average — on the other hand, shareholders must be pleased with this kind of a look.

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Here’s the weekly chart for Sumitomo Financial Mitsui Financial Group:

Note that the price is now above the previous peak levels from March, 2021 and February, 2022. It’s happened quickly and weekly buying volume (in grey shade below the price chart) is the highest it’s been in years. Now trading above both the 50-week and the 200-week moving averages, it’s a bullish look.

The monthly price chart for Sumitomo Mitsui is here:

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This longer-term perspective shows that the bank had traded as high as $10.50 in late 2013 with another peak of just above $9.50 in early 2028.

With a market capitalization of $56 billion, the stock has an average daily volume on the New York Stock Exchange of 3.48 million shares. Its price-earnings ratio is 8.3 and, now trading at half its book value, this major financial institution may fit the profile of a value stock.

As a comparison to the big United States banks: CitigroupC
, with a market cap of $86 billion, has a p/e of 5.97 and trades at just less than half book. JP Morgan Chase has a market cap of $387 billion, a price-earnings ratio of 11 and goes for 1.52 book value. Well Fargo has a p/e of 10, a market cap of $$156 billion and trades at book.

None of these American banks are anywhere near new highs for the year, a definite contrast now to the Japanese financial institution.

Sumitomo Mitsui is paying a 3.34% dividend.

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Here’s daily price chart for the Yen:

This is the currency move that got investors excited again.

Not investment advice. For educational purposes only.