Tokyo Stock Price Index (TOPIX) is on a constant rise. Japan stock gained just over 11% and pushing it to become the top-performing share market in Asia, beating Taiwan.
Japan stock gains from automakers
According to Bloomberg, Japan’s Topix reached surpassed a long-time record from May 1992 by reaching above 2,000 point level. Japan derived most gains from its automakers and lenders. Overall, the TOPIX has recorded tremendous returns in 2021. Accordingly, Topix’s returns in 2021 have also exceeded the MSCI Asia Pacific Index.
Quoted from Bloomberg, the head of Japan investment at Pictet Asset Management, Hiroshi Matsumoto, said, “the bad news is slipping away one by one, and what’s left is earnings”. In addition to the recovery earnings, Japan’s initiative to lift the coronavirus state of emergency is helping the country grow. Furthermore, Japan is currently in the progress of vaccinating the citizens.
By Sunday, Japan is planning to end the state of emergency in the Tokyo region. Infections have significantly reduced. Meanwhile, restrictions in other nations are not showing any sign of heavy damage to the country’s economy. Compared to the first state of emergency from a year ago the damage that it might induce is minor.
Market watchers anticipate more of Japan’s stock
The future of Japan’s stock now lays on Bank of Japan’s soon to be announced decision. On Friday, the Bank of Japan is due to announce the results of a policy review that will alter its asset purchases.
According to Nikko Asset Management Chief Global Strategist John Vail, the Fed decision “adds pressure on the BOJ to maintain a very dovish stance”.
Nikkei’s report mentioned that the BOJ will repress exchange-traded funds when stocks are high. The Bank of Japan is also limiting aggressive to a minimum level. Accordingly, the bank will be able to abolish around 6 trillion yen ($55 billion) annual ETF purchase target.
Upon the issue, Takeo Kamai of CLSA Securities Japan Co. said, “market sentiment feels like it is to the upside for now, but I think we remain hostage to the treasury yields”. The yen’s “trajectory toward 110 is also a tailwind for the exporters,” Kamai added.
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