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Japan the End of the Beginning 2013 04

Japan the End of the Beginning 2013 04

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Published by kcousins
Macro economic analysis of Japan. Japanese households massive financial assets (>$15 trillion) are overwhelmingly invested in bank deposits and bonds. As the credibility of the BoJ inflation target rises, they will be forced to buy equities and foreign assets. The sharp moves in the Yen and Topix are just the start of a much bigger trend.
Macro economic analysis of Japan. Japanese households massive financial assets (>$15 trillion) are overwhelmingly invested in bank deposits and bonds. As the credibility of the BoJ inflation target rises, they will be forced to buy equities and foreign assets. The sharp moves in the Yen and Topix are just the start of a much bigger trend.

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Categories:Types, Research
Published by: kcousins on Apr 29, 2013
Copyright:Attribution Non-commercial

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03/19/2014

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Japan
 –
The End of the Beginning Macro Economic Research April 2013
Please refer to the disclaimer at the end
Putting the Recent Moves in Context
Japanese equities are up nearly 60% from the November 2012 lows, making it by far the bestperforming market 2013 YTD (up 33% in USD compared to 11% for the S&P500).Perhaps the most important driver of the move has been the close to 30% depreciation in theYen. Since replacing aging hawk Shirakawa as the new Governor of the Bank of Japan, Kurodohas set a target of achieving 2% inflation within 2 years, and accelerated QE to asset purchasesof some $75bn per month.
 
Japan
 –
The End of the Beginning Macro Economic Research April 2013
Please refer to the disclaimer at the end
The sharp move has resulted in some brokers scaling back expectations, for example Morgan
Stanley’s April 15 piece, the cover page copied below.
 
 
Japan
 –
The End of the Beginning Macro Economic Research April 2013
Please refer to the disclaimer at the end
I think they are wrong and a longer term view is necessary to evaluate the moves, a forty year chart of the Yen is shown below.The longer term chart of the Topix index also puts the recent appreciation into context.

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