Japan Utility Stocks Jump After PM Candidate Backs Nuclear Power

(Bloomberg) -- Shares of Japanese utilities got a boost of confidence after a leading contender to become prime minister said restarting nuclear power plants was necessary to achieve the country’s net zero goals, reversing a previous stance that sought to phase out the energy source. 

Power providers and nuclear reactor operators soared on Thursday. Tokyo Electric Power Co. jumped as much as 12%, the most in almost five years, while Kansai Electric Power Co. and Shikoku Electric Power Co. each rose more than 5%. The Topix Electric Power & Gas Index gave the biggest boost to the broader index, which declined after rallying for eight consecutive days. 

The rally follows a comment by Taro Kono, an administrative reform minister and possible candidate to replace Prime Minister Yoshihide Suga, that nuclear power plants are needed to some degree for the country to achieve its pollution-curbing goals, according to Jiji Press. He added that he doesn’t plan to halt reactors anytime soon. 

Sanae Takaichi, a former internal affairs minister and another candidate in the upcoming Liberal Democratic Party leadership election, also said she will make small modular reactors a national project. 

Japan has been slow to restart nuclear reactors shuttered in the aftermath of the 2011 Fukushima meltdowns. Most of its 33 operable reactors remain offline as widespread local opposition to atomic energy has made it challenging.

Kono has opposed nuclear power in the past and made comments about phasing out the nation’s reactors, and previous media polls that showed him as the top contender for the premiership have sent renewable energy related stocks -- from solar power to biomass power plant operators -- jumping earlier this week. 

While a prime minister doesn’t have the ability to clear the restart of individual nuclear reactors, the office can set policies that have a long-term impact on the future of atomic energy. Reactors don’t resume operations until receiving an endorsement from an independent regulator and local governments.

Utilities immediately benefit from restarting idled nuclear reactors, as it boosts profits by lowering imports of more expensive fossil fuels. 

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