TOKYO: Nissan shares soared today as investors cheered the automaker’s plans for a share buyback, after the bloodbath on equity markets at the start of the year hammered its stock.
Japan’s number two automaker said after the Tokyo market closed on Friday that it would purchase up to 400 billion yen (US$3.5 billion) worth of its own shares by the end of the year.
In response, the Tokyo-listed shares surged as much as 12 percent in opening trade - the most in seven years, according to Bloomberg News. They finished 5.45 percent higher at 1,024.5 yen.
The buyback, announced after a board meeting, will start on Monday and run until Dec 22, Nissan said. Share buybacks tend to lift the value of existing stock.
Separately, Renault said that it would sell its shares in order to maintain its current 43.4-percent stake in Nissan, which in turn owns 15 percent of the French automaker.
The pair have had a business tie-up since the late nineties and Nissan said its buyback will not lead to any “material change” in their alliance. Combined, they are the world’s fourth-biggest carmaker with 8.53 million unit sales in 2015.
Renault-Nissan alliance chief executive Carlos Ghosn said the decision to return cash to shareholders was prompted by the Japanese automaker’s strong cash flow position.
