HONG KONG - As Japan's stock market roars to multi-decade highs, large investors with long memories say they are staying out, wary of sagging momentum and the prospect the central bank will unwind its massive monetary stimulus. Riding a wave of buybacks and strong corporate earnings, and pumped up by a weak yen, the broad Topix index scaled peaks not...
The Tokyo Stock Exchange building is seen after the TSE temporarily suspended all trading due to system problems in Tokyo, Japan on Oct 1, 2020.HONG KONG - As Japan's stock market roars to multi-decade highs, large investors with long memories say they are staying out, wary of sagging momentum and the prospect the central bank will unwind its massive monetary stimulus.
The research arm of BlackRock, the world's biggest asset manager, recommends an "underweight" allocation to Japan and is waiting for policy uncertainty to clear, according to Ben Powell Asia-Pacific chief investment strategist at BlackRock Investment Institute. "A very significant inflow from global investors ," Powell said, "but then unfortunately, a lot of the enthusiasm has dissipated." He said more policy uncertainty would allow a better focus on domestic drivers.
Swiss wealth manager Union Bancaire Privée is also underweight Japan, with the policy outlook presenting currency risks. UBS' chief investment office is neutral and prefers China as a global slowdown looms.The policy and communication challenge for new BOJ governor Kazuo Ueda is a tricky one. He has begun laying the foundations for a shift by saying the bank will debate an exit strategy from its policies once inflation looks stable.
To be sure, Mitra is more positive on banks and smaller companies, and plenty of investors - Warren Buffet included - believe stocks have a way to rally in Japan.
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