Shares in Fukushima operator Tepco surge amid hopes for nuclear restart

TOKYO, Jan 26 (Reuters) - Shares of Tokyo Electric Power Co (Tepco), owner of the defunct Fukushima nuclear plant, extended a rally on Tuesday that has seen the stock gain nearly 60% this month, making some analysts wary that the rise is overstretched.

Gains have been driven by speculation that the power utility could restart one of its nuclear plants, which have been closed since the Fukushima nuclear disaster in 2011.

Tepco shares rose 4.9% on Tuesday to their highest levels since last February, bucking a fall in the broader stock market. Trading in the shares was almost four times their daily average, making them the 10th most-traded stock on Tokyo’s main board.

Investors piled in as Japanese media reported that Tepco outlined a plan to restart one of its plants, in Niigata prefecture, at a meeting on Monday with local residents. The plan, though, met strong opposition from residents, according to media.

The governor of Niigata has also yet to give the green light for a restart of the plant, but Tepco shares are now up 57.7% since the start of the year and on course for their best month in eight years.

“This is a mysterious price move. A lot of speculative money appears to be flowing in,” said an analyst at a Japanese brokerage.

Tepco, Japan’s biggest power company by sales, has tried to improve its nuclear operations, as well as split its business into transmission and generation under reforms pushed through by the government. It is also investing in new businesses, including renewables.

But its shares have been off-limits to most investors since the disaster in 2011 when three reactors suffered meltdowns after a massive earthquake and tsunami hit northern Japan.

The company has not paid a dividend for years, has been saddled with compensation for the disaster and has one remaining nuclear station left to try to restart but is struggling to convince local communities about its safety.

“There may be some speculation that it could restart a nuclear power plant. It’s been almost 10 years since the accident so it’s not a total surprise if there will be a new development,” said Hiroyasu Mori, strategist at Okachi Securities.

Since Japanese Prime Minister Yoshihide Suga set a target in October to cut greenhouse gas emissions to zero by 2050, some have called for nuclear plants to restart, but public distrust remains strong.

At 429 yen, Tepco’s share price is still down 80% from levels seen before the nuclear disaster.

Still, some analysts say Tepco’s share surge is starting to resemble wild moves in some other stocks around the world as massive stimulus from central banks during the COVID-19 pandemic has left financial systems awash with money, with some of it pouring into asset markets. (Reporting by Fumiya Mizuno and Hideyuki Sano, additional reporting by Aaron Sheldrick; Editing by Susan Fenton)