The Nikkei 225 Index hits a 5-month high in the “catch-up” rebound of election fever


Japan Business and Finance Update

Japan’s Nikkei 225 Index broke the 30,000-point mark at the opening of Tokyo on Tuesday. As investors prepare for the ruling party’s leadership campaign and the national election, “animal spirits” returned and hit a five-month high.

Building on the market rebound that began at the end of last month, the broader Topix Index, which underperformed for most of this year, rose a few days after it hit a 30-year high. The fund manager said that Tokyo experienced a “reduction squeeze” before global funds rushed to adjust their positions.

The sharp rise of the Nikkei Index means that the index still has a great influence on the sentiment of Japanese retail investors. It has risen by more than 1,200 points, or about 4.2%, since Japanese Prime Minister Yoshihide Suga took office on Friday morning. Announce resignation.

There is widespread speculation in the market that Yoshihide Suga’s successor may launch a stimulus plan that may be as high as 30 trillion yen (US$273 billion) to save the ruling Liberal Democratic Party from the possible humiliation suffered by the general election before the end of November.

Followed collections Yoshihide Suga’s one-year term includes former Minister of Foreign Affairs and Defense Fumio Kishida and senior Liberal Democratic Party figures. He told the Japanese media that he would have Bank of Japan maintains Its 2% inflation target and extensive stimulus plan.

Nomura Securities analysts said that regardless of the day’s policy issues, the election for the lower house of the Japanese Diet has a record of triggering a market rebound.

In the seven weeks before the five House of Commons elections since 2005, foreign investors who own about one-third of the Japanese market and account for most of the daily trading volume have become net buyers with an average of ¥3.1 tons. According to Nomura Securities’ chief equity strategist Ikeda Yunosuke, this is equivalent to an average increase of about 1,500 points in the Nikkei.

But market analysts, including Ikeda, caution not to attribute the current rebound solely to leadership changes.After a long period of adjustment, the Global Fund is rapidly adjusting its investment portfolio Underweight They say that the world’s third largest economy.

The Japanese stock market also rebounded after its poor performance in 2020, during which time the Topix Index rose by less than 5%.A global pandemic Rescue rally Propelled the S&P 500 index to rise more than three times that number.

“It is very important to realize that this is not just an election fever,” Ikeda said. “After a long period of time lower than the valuation of other markets, the Japanese stock market is a process of catching up.”

He said that there are many reasons why the Japanese market is undervalued, including the view that the Yoshihide Suga government Mishandled The Covid-19 crisis and the decline in approval ratings that seem to undermine any prospects for reform.

The Tokyo Olympics without a live audience highlights the collapse of Japan’s inbound tourism Can’t lift the energy.

From May to July, foreign investors were net sellers of Japanese stocks, causing the country’s benchmark index to perform poorly relative to global peers.

Strategists say that there is a particularly noticeable gap between the price-earnings ratio of the Japanese market and the price-earnings ratio of the European benchmark.

But in the past 10 days, as the number of Covid-19 infections in Tokyo has begun to decline, attention has shifted to The new leader might do To boost the economy.

Global fund managers who have severely reduced their holdings in Japan Recent months John Vail, chief global strategist at Nikko Asset Management, said they were attracted by the severity of the reversal and are turning to buyers.

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