Japan: land of the rising stocks

Japanese stocks look set to benefit from Donald Trump's presidency, says Andrew Van Sickle.

Talk about a "Trump bump". Japanese stocks are among the assets "most geared" to rising US rates, a strong dollar and weak yen, and an increase in global growth, says Jesper Koll of Wisdom Tree Investments. The broad Topix market index gained almost a fifth once Trump's reflation of the US economy began to be priced in. The more widely quoted Nikkei 225 index posted a similar performance and has now managed a fifth consecutive rising year a feat last achieved during the 1980s bubble years.

The good cheer looks set to last. Now that the yen is falling again, the earnings of the stockmarket's heavyweight exporters should head higheronce more. The yen-dollar rate has bounced from around 102 to 117 since November. The Japanese economy looks on track for 1% growth this year, with pricing pressure slowly gathering momentum, reckons Capital Economics. That is just about good enough to suggest that the Bank of Japan won't provide added monetary stimulus for now. But it is determined to anchor ten-year bond yields at zero, which should be enough to put further downward pressure on the yen, especially since likely US interest-rate rises mean the yield on US assets will head higher.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.