The Great Recovery of Japanese Stocks: Reasons, Predictions, and Expectations

The Japanese stock market attracted investors around the world, and Japanese stock prices recorded a significant jump of 14% since the beginning of this year, according to data published today, Tuesday, by the American “CNBC” channel.

The Nikkei 225 index also continued to rise, having risen by about 20% since the beginning of the year until last Monday.

Analysts attribute the reasons for the great recovery in the Japanese financial market and the intensive purchases carried out by foreigners on the Tokyo Stock Exchange since the beginning of this year to three main reasons, which are the current deteriorating exchange rate of the yen against the dollar and the possibility of its rise in the future, the expected high profitability of Japanese companies, and the concern of large investors about financial instruments. and increased fears of a decline in the “Wall Street” market amid banking crises, the US debt ceiling, and the prospects of recession facing the US economy.

The concern of large investors about US financial tools increases fears of a decline in the “Wall Street” market amid banking crises and the debt ceiling

The Japanese economy is among the three largest economies in the world along with the US and Chinese economies, and the Japanese market is a safe haven for investors in Asia in times of financial crises and political turmoil.

Trading Economics, a global organization specializing in economic data, estimates that the size of the Japanese economy will rise to $5.12 trillion next year, compared to its current size of $4.941 trillion. This means that it is among the major financial markets that have the investment depth and is characterized by the free market system in Asia.

Experts at the American investment bank “Goldman Sachs” said, in a research note on Monday, that the flow of foreign investors to stocks in Japan is still less than expected, which means that the market is heading towards attracting more investors during the current year.

In the same regard, experts at the Bank of America believe that the Japanese stock index is heading towards a further increase.

Experts Masashi Akutsu and Tony Lin at the US bank said in the research note that they see room for more outflows of Japanese stocks, which raised their expectations for Japanese indices at the end of the year.

Japanese companies that exited US bonds are buying back their shares, due to their expectations of rising prices

They added, “We believe that the continued momentum of buybacks this year, along with potential outflows in the equity market is similar to 2013, and these inflows are likely to sustain the market’s recovery for the rest of the year.”

Japanese companies that exited part of their US bonds are repurchasing their shares, due to their expectations of an increase in their prices due to external inflows into the market.

Bank of America analysts believe that the Tokyo Topix stock index will rise to 2,300 points, representing an increase of 7% from current levels, with optimistic expectations for a rise to 2,400 points.

They also expect the Nikkei 225 index to rise to 32,500 points, or 4% from Tuesday’s levels.