Japan ADRs Continue to Surge as Nikkei 225 Crosses the 40,000 Mark
Last month, the $Nikkei 225(.N225.JP$ reached its peak from 1989, with global investors flocking to Japan's largest corporations, motivated by better returns to shareholders, the depreciating yen, and surging corporate earnings.
The Nikkei 225's 40,000 is certainly a key psychological level, which could offer some resistance for the index and bring volatility," said Charu Chanana, strategist at Saxo Capital Markets based in Singapore. "But when structural factors remain in favor, and yen weakness continues, it is likely to be more a bullish signal rather than fueling any concerns of Japanese stocks being overbought."
Why Japanese Stocks Are Booming
Investors point to the increasing embrace of inflation as one of the key elements, accompanied by evidence of improved corporate governance and Warren Buffett's backing. Presently, many regard inflation, with its anticipated enhancement of corporate profit margins and consumer spending, as the most tangible indicator that the globe's third-largest economy is on the verge of breaking free from a prolonged period of stagnation or minimal growth.
A significant number of international investors continue to be optimistic about Japanese equities. $Blackrock(BLK.US$, the largest asset manager globally, along with Amundi Asset Management, the biggest money manager in Europe, anticipate that the momentum will be sustained through earnings expansion and shifts in corporate governance practices.
This is not a groundless frenzy," said Masahiro Yamaguchi, a senior market analyst at SMBC Trust & Banking Ltd., citing the healthy economic and corporate backdrop in both Japan and the US.
Source: Yahoo Finance, Bloomberg
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