For two days in a row last week fluctuations in the Nikkei index exceeded a thousand points. In today's installment, we asked LOOK Research Institute senior economist Koji Takeuchi MIZUHO comment of the recent volatility in stock prices in Tokyo and comment on the prospects for the future.
First, as said Takeuchi, stock prices have grown at a very rapid pace. As for the index Nikkei, then the players in the market had expected at the end of this year it will reach 16,000 points. Since the Nikkei has almost reached this level, it is, according to Takeuchi, said that the market is overheated. May 22 when the dollar temporarily reached 103 yen, the yen decline has stopped. According to Takeuchi, this was another reason for the sale of the shares.
As for the prospects of the market, then, according to Takeuchi, the weakening of the yen gives impetus to the economic recovery of the Japanese economy. As suggested by Takeuchi, in the medium term, the stock market may continue to remain the trend of growth, due to expectations of an economic recovery and an increase in corporate profits.
As said Takeuchi, all known predictions of foreign investors point to the importance of the growth strategy, which the government of Prime Minister Shinzo Abe said one of the three pillars of its economic policy. Considerable attention is paid to what kind of growth strategy will be developed. If its content exceeds market expectations, then, according to Takeuchi, this will help push the stock price up. But surprise the market can be a difficult task because the growth strategy is not able to give positive results in the short term and the fact that it is already known to some extent. According to Takeuchi, it is essential to ensure that the strategy is implemented consistently and steadily.