At the same time, Abenomics, the three-pronged revival programme from Prime Minister Shinzo Abe, is showing signs of progress, with firms raising wages. Although the economy "is still limping out of a recession from the second to fourth quarters of last year", this weak growth "has only convinced investors that the BoJ will unveil another trick in its sleeve".
In other words, expect more quantitative easing (QE) if the economy fails to pick up which, based on what's happened during previous rounds of money printing, seems likely to boost stocks further.
Can stocks go higher?
Recent news stories suggest this trend is finally under way last month's announcement that successful but notoriously shareholder-unfriendly robotics firm Fanuc is bowing to pressure from investors for more transparency and higher payouts may be a turning point. "With dividends and share buybacks also expected to rise, cash equities buying by foreign investors is expected to continue in a sustained way," says Shun Maruyama of BNP Paribas.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Japan is also benefiting from what Chao Deng in the Wall Street Journal calls an "increasing global appetite for Asian stocks". Hong Kong's Hang Seng index "ended a three-day week up 7.9% at 27,272.39 as its rally accelerated". This was the biggest weekly gain since October 2011. Against this favourable backdrop, there's a growing consensus that Japan will make further gains.
True, there's a risk that the Nikkei "may have risen too far too fast" in the shorter term, says Maruyama, but the index is still likely to end the year higher at around 22,000. Others are far more optimistic:Ben Collett of Sunshine Brokers thinks that there's "a 50% chance the Nikkei will rise to 30,000 in a year's time".
-
300,000 remote workers to miss out on working from home tax reliefThousands of workers forced to work from home will no longer benefit from the working from home tax relief next year. How will it affect you?
-
How to tap into AI energy stocksOne certainty about generative AI is that it is hugely energy-intensive. Companies providing that power look set to capture the benefits.
