Japan Stock Exchange at highest since 1990
Precisely in the days when the G7 is being held in Hiroshima, with the world‘s greats committed to a common front against Russia and China, Japan shines on the financial markets. With the session on Friday 19 May, in fact, the Tokyo Stock Exchange has returned to its former glory. L‘indice Nikkei 225 has exceeded altitude 30 thousand pointsand the Topix has risen by 6% since the beginning of the year, a top level they haven’t seen since 1990. This is not a bolt from the blue: analysts have been positive for months on the Far East markets and in particular on Japanese lists .
Foreign investors are back
The reason is soon said: the foreign investors have returned to invest after years of absence. This was pointed out by Frank Benzimra and Tsutomu Saito of Societè Generale, according to which the new interest is due “fundamentals, robust domestic demand and a more generous dividend policy“ by the Japanese groups, which are also accelerating with share buybacks. In practice, the trends that were seen last year on European and American price lists have now also landed in Asia.
The French investment bank also released the data relating to the purchase of Japanese shares by foreign investors, which in April totaled a 2.1 trillion yen ($15.4 billion), noting that the nation’s corporate sector still remains the largest net purchaser of stocks, with a purchase volume of 1.1 trillion yen since the beginning of 2023.
Warren Buffett’s Mass Buying
But what struck operators the most is that among the buyers of Japanese shares there is also the largest investor in the world, Warren Buffett. The oracle of Omaha, in fact, has taken important positions on the Japanese price list so much that the Wall Street Journal pointed out that Japan is the country outside the United States where Buffett has put more money: in April the financier increased the shares already purchased by his holding company Berkshire Hathaway in five Japanese trading companies, bringing them to 7.4%.
It’s about Tochu, Marubeni, Mitsubishi, Mitsui e Sumitomo and they all stand out for having a business model that can be compared to that of Berkshire Hathaway itself, as they all hold a diversified portfolio, with a long-term investment perspective and a focus on value stocks and cash flows of cash.
“I just thought these were big companies. Companies that do something that I understand. Something similar to Berkshire in the sense that they have different interests,” Buffett said in an interview with the CNBC show Squawk Box, during his recent visit to Japan. “And by the way the shares were being sold at a ridiculous price“.
Macroeconomic data and negative rates in Japan
In addition, inflation figures were announced on Friday 19 May, which rose by 3.5% in April. Excluding food and energy prices, the core component of inflation jumped by 4.1%, at the strongest pace since September 1981well above the 2% target set by the Bank of Japan.
Not only has Japan not yet raised interest rates, but an ultra-expansionary monetary policy is still active in the country, focused not only on yield curve control but also on negative rates stuck at -0.1%.
Per Goldman Sachs trimestrali solide
Positive on the Tokyo Stock Exchange are also the strategist at Goldman Sachs, who wrote in a note that solid fundamentals and the prospect of structural reforms “justify the bullish stance” on Japanese equities.
Goldman also cites solid corporate earnings as the reason for its bullish outlook for the Tokyo stock, economic valuations of securities and the fact that the share benefits from the interest of those investors who think in a long-term perspective: as, precisely, of Warren Buffett.