Amid Japan's stock market hitting historic highs, I have a casual conversation with my friends in government and finance to dissect its surge, eyeing what lies ahead in a shifting global economy.
I definitely see it as a tailwind. Despite the Japanese retail segment's ongoing caution towards equities, it's noteworthy that, for the first time in quite a while, a significant portion of the most purchased funds are linked to Japanese corporations. This shift indicates a growing interest and confidence among investors in the Japanese market
I would argue that these factors have already been accounted for in the market. This explains why, despite Japan's economy experiencing substantial growth since 1989, the stock market has remained relatively stagnant. Looking ahead, while these issues may become increasingly significant and pose a risk to Japan's economic trajectory in the long run, the immediate concerns should focus on unpredictable 'black swan' events. These include the potential for a massive earthquake in Tokyo or unexpected, significant fluctuations in the value of the Japanese yen.
Oh wow. That’s Shin-Chan👍
Besides the factors you mentioned, most Japanese havent really invested at all. Rei, do you consider this to be a tailwind ?
I definitely see it as a tailwind. Despite the Japanese retail segment's ongoing caution towards equities, it's noteworthy that, for the first time in quite a while, a significant portion of the most purchased funds are linked to Japanese corporations. This shift indicates a growing interest and confidence among investors in the Japanese market
Thanks for the clear summary. What about the ongoing issues of demographic challenges, weak domestic demand, and zombie companies?
I would argue that these factors have already been accounted for in the market. This explains why, despite Japan's economy experiencing substantial growth since 1989, the stock market has remained relatively stagnant. Looking ahead, while these issues may become increasingly significant and pose a risk to Japan's economic trajectory in the long run, the immediate concerns should focus on unpredictable 'black swan' events. These include the potential for a massive earthquake in Tokyo or unexpected, significant fluctuations in the value of the Japanese yen.