The inflows in the Japanese financial space increased today with all the important banks and financial institutions recording an increase in their prices as investors cheered over the revival of the Japan’s economy. Market sentiment is positive with the Nikkei 225 and Topix, both index indices rising significantly. Heading the list was Sumitomo Mitsui Financial Group Inc., of SMFG, which rose 2.53 percent to 9,107 yen at the close of the market.

This positive result was however the result of recent signs in the lending business and the possibility of a rise in interest margins as the BOJ shifts towards a tighter monetary policy.

Similar advances were also witnessed at other big financial houses whereby Mitsubishi UFJ Financial Group and Mizuho Financial Group registered more than 2% rise. Such maneuverers occur due to shifting macro environment for Japanese banks and therefore adjustments to expected conditions appropriate for these organizations.

It was not only traditional banks that posted positive changes in the financial sector in the past year. Also many of the insurance stock shook similar increase and Dai-ichi Life Insurance Co. jumped up 0.06% at 3,737 yen at the end. The increase in quotation of insurance stocks is as a result of improvement in confidence by investors to the insurance sector especially at this periods of increasing interest rates and aging population who are more concerned with long term savings and risk management.

Catalyst such as an improvement in the Japanese economy, which is evident in the recent economic statistics in the country also helped in improving the performance of the financial stocks. It is still low though it is anticipated that there are improvements on consumption expenditure and investments by firms. Thus, the economic conditions are gradually rising, with positive effects on banking and other financial organizations, which are more successful during the economic growth.

Also on the positive side was the disclosure that many Japanese financial firms are already considering the possibility of expansion locally and globally. Sources said some of the country’s largest banking institutions are at various levels of exploring acquisitions or strategic alliances to boost their standings in strategic markets and supplement revenue streams.

Such a strategic move has been embraced by investors, and it is an indication that the management delegates the work and offers its confidence in the future of the sector. On a day that saw a stellar performance of the financial when the Financial index which posted a one day gain stood at a 13. The market upturn was mostly driven by across the board industries where technology, manufacturing and the consumer goods sectors recorded impressive gains.

Such a broad-based gain indicates that the investors’ attitudes towards the general potential of Japan’s economic recovery are improving incrementally notwithstanding the global volatilities. Another reason which contributed to the positive outlook was recent depreciation of yen against other major currencies. On the downside, it may be awkward for some of Japan’s industries that deal in physical exports, but for the balance of industry the weaker yen is still good and help to value the overseas earnings of Japanese multinationals.

This currency effect has been more or less realized especially in the financial sector or institutions with frequent international operations. Moving on into the future, market analythcs now have a bullishly positive outlook for Japanese financials.

Although they accept that there are still problems such as possible world economic fluctuations and changes in regulative measures, many professionals think that the given sector is likely to build up the pros of Japan’s slow but gradual recovery in economical activity and shifts in the monetary policy.

Analysts are also keen to argue that many of the companies are still trading at somewhat cheaper multiples than their global peers, and therefore Japanese financial stocks can still possibly deliver extra gains to those patient enough to wait in the long run. Even during the closing of trading session more focus was being laid in the potential future economic releases and policies affecting the financial industry.

Of special focus will be made to the Bank of Japan’s commentaries on possible future directions of its monetary policy decisions and action s by the Japanese government towards the stimulation of the economic growth and the enhancement of the financial market dynamics. As for now, though, the bulls in Japanese financial stocks can rejoice in a day’s gains and signs of higher expectations for the sector.

For many years Japan was occupying one of the leading positions in export and import of goods and services and as the circumstances change the economy of Japan will probably remain one of the most attractive for foreign and domestic investors willing to get the exposure to one of the largest and rapidly developing economy in the world, specifically in the financial industry.