There are no one-way bets in global finance, but Japan's stock market comes close. The authorities are about to funnel large sums into Japanese stocks openly and deliberately under the next phase of Abenomics, both by regulatory fiat and by purchasing the Nikkei index directly with printed money.
Prime minister Shinzo Abe is unshackling the world's biggest stash of savings, the $1.3 trillion Government Pension Investment Fund (GPIF). Officials say the ceiling on equity holdings will rise from 12pc to around 20pc as soon as August, opening the way for a $100bn buying blitz.
Fund managers are suddenly in a race to get there first. Japan Post Bank - where Mrs Watanabe dutifully places the family money, confiscated from her Salaryman each month before he can spend it - is itching to rotate more of its $2 trillion holdings into equities before inflation pummels the bond market. So is Japan Post Insurance, no minnow either at $850bn.
Mr Abe's move comes sooner than expected and amounts to a market shock, though nobody should be shocked anymore as he keeps doubling down on the world's most radical economic experiment.
Here is Ambrose Evans-Pritchard’s article.
History’s lesson for stock market investors – Don’t fight the central bank.
The Nikkei 225 is technically overbought in the short term (weekly & daily) but I maintain that it can move significantly higher over the lengthy medium term. Ambrose Evans-Pritchard mentions many of the reasons in his article above, which is well worth reading.Back to top