Foreign investors give up on Abenomics
Date
4/12/2016 12:10:30 AM
'We're about to see a world where everything achieved through the BOJ's easing will vanish' Hitoshi Ishiyama chief strategist at Sumitomo Mitsui in Tokyo told Bloomberg. 'The lack of trust in Abenomics zero results from the BOJ's stimulus risks of sliding profits from a stronger yen it's not surprising foreign investors will want to re-evaluate their investments in Japanese stocks.'
Surprisingly the things that have helped other equities markets around the world have hurt Japan. The US Federal Reserve Bank's cautious tone on interest rates helped the Standard & Poor's 500 Index recover most of its losses since the beginning of the year. At the same time it weakened the dollar and pushed up the yen. Investors who have been worried about global growth have actually been buying the Japanese currency in a flight to safety. The yen is now trading near its strongest level since October 2014.
Even BlackRock the world's largest money manager has stopped putting out bullish calls on Japan equities.
Masahiro Ichikawa a senior strategist at Sumitomo Mitsui Asset Management told Bloomberg he fears a downward spiral. Foreign investors are needed to boost the stock market and if equities don't rise the public will lose confidence and curb spending as he sees it. That could send Japan back into deflation.
According to a Merrill Lynch survey overweight positions on Japanese stocks fell for a third straight month in March with investors' outlook on the economy dimming and concern over earnings growing. They've sold a net 5 trillion yen since the second week of January the longest stretch since 16 weeks of selling in 1998 and the most in records going back to 1993.
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