Lambda and Mu in Japan

Discussion in 'Wall St. News' started by cobco, Sep 7, 2021.

  1. cobco

    cobco

    #1     Sep 7, 2021
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  2. wrbtrader

    wrbtrader

    SoftBank leads Nikkei past 30,000 in rising Japan election fever

    Prime Minister Yoshihide Suga’s resignation and hopes of stimulus help drive gains, say analysts

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    Traders have declared a return of animal spirits to the Japanese stock market on hopes that a new political shake-up could unlock vast economic stimulus and give further impetus to global funds adjusting heavily underweight positions in many portfolios. Technology and investment group SoftBank led the rally on Tuesday, with stocks jumping almost 10 per cent and pulling the Nikkei 225 index above 30,000 points for the first time since April, up 8 per cent in just six trading days.

    The surge, which carried other tech names such as Murata and Tokyo Electron close to multi-decade highs, came as investors prepared for a leadership contest in the ruling party and later national elections, after Prime Minister Yoshihide Suga last week announced his resignation.

    The three leading candidates are all expected to campaign on plans to revitalise the economy with potentially gargantuan stimulus packages. But the rally also suggests that Japanese stocks are warming up after a long period of drab performance. The Nikkei 225 has gained just 2 per cent in dollar terms this year while many major markets are well into double digits.

    “It’s very important to realise that it is not just election fever,” said Yunosuke Ikeda, Nomura’s chief equity strategist. “It is a catch-up process for Japanese stocks after a long period of undervaluation against other markets.”

    The broader Topix index, which has underperformed for much of the year, hit a 30-year high on Monday, building on a rally that began late last month.

    The Nikkei index, which is highly influential over the mood of Japanese retail investors, is up more than 1,200 points or about 4.2 per cent, since Friday morning when Suga announced his resignation.

    Oki Matsumoto, chief executive of the online brokerage Monex, said the imminent change of political leadership had made a profound impact on retail investors. “The process has given the market an atmosphere of change after a long period of feeling stagnant and congested,” he said.

    The market is feeding on speculation that Suga’s successor could unveil a stimulus package, possibly worth as much as ¥30tn ($272bn), to rescue the ruling Liberal Democratic party from potential humiliation at a general election scheduled before the end of November.

    Favourites to follow Suga’s one-year tenure include Fumio Kishida, a former foreign and defence minister and a top LDP figure who told Japanese media that he would have the Bank of Japan maintain both its 2 per cent inflation target and its expansive stimulus programme.

    Elections for the lower house of Japan’s Diet have a record of generating market rallies regardless of the policy issues of the day, according to analysts at Nomura.

    In the seven weeks before the five lower house elections since 2005, foreign investors, who own about one-third of the Japanese market and account for most of daily trading volumes, have been net buyers of an average of ¥3.1tn. That equates to an average rise of about 1,500 points on the Nikkei index, according to Nomura’s calculations.

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    The latest surge in buying interest stands in contrast to a slow crawl in Japanese stocks compared with global markets. Shortly before Suga’s resignation, the value of just four big US tech companies eclipsed the entire Topix index, or all 2,187 companies on the main board of the Tokyo Stock Exchange.

    Foreign investors were net sellers of Japanese equities between May and July, contributing to the underperformance of the country’s benchmark indices against international counterparts. In 2020, the Topix rose less than 5 per cent. A global pandemic relief rally drove the US S&P 500 benchmark to gains of more than three times that figure.
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    wrbtrader
     
    #2     Sep 7, 2021
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