Resona Corporate Partners says it is confident that negative rates will hold yen down and boost corporate earnings.
Resona Corporate Partners says it remains ‘very bullish’ on Japanese stocks despite evidence that many foreign investors are pulling out after the TOPIX index recently entered bear market territory.
Spooked by the briefness of the market rally that accompanied the Bank of Japan’s decision to adopt negative interest rates for the very first time, many investors have, according to Yoshi Fujikawa, chief economist at Resona Corporate Partners, “simply thrown in the towel”.
“We are very confident that the BoJ’s negative rates gambit and the prospect of more QE will send the indexes up again but we can understand why investors took one look at the potential impact on the banks and decided to clear out,” said Fujikawa.
QE and negative rates are both aimed at stoking consumer price inflation but also have the effect of weakening the yen and, in doing so, making Japanese exports cheaper. This feeds into higher profits and, by extension, higher share prices.
The Bank of Japan has been implementing the “arrows” of Prime Minister Shinzo Abe’s “Abenomics” plan for reinvigorating the Japanese economy by launching colossal quantitative easing programs that are designed to increase the base money supply by 80 trillion yen each year until core inflation is at the desired 2%.
“The policies haven’t worked; consumers aren’t spending, inflation is still painfully low and they’re 4 years in now. That said, there’s no doubt that stocks benefit and, consequently, Japanese equities will continue to remain well-represented in the Resona Corporate Partners portfolio,” concluded Fujikawa.
About Resona Corporate Partners:
At Resona Corporate Partners we offer competitive industry standard charges on all of our range of markets. You can take positions from major global indices and equities, to commodities and currencies. Our portfolio managers are equipped with the latest information from our award winning analysts department to keep you one step ahead of the market.
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Address: 31F Breeze Tower, 4-9, Umeda 2-chome,
Kita-ku, Osaka-shi, Osaka 530-0001, Japan
Phone: +81 – 645 604 426
Email: info@resonapartners.com
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