When operating in stocks, it pays to not become dogmatic, stay flexible, and go where the opportunity looms. Follow The Money.
Japan’s equity market has been experiencing a rare bloom of such opportunity of late. It’s one of the few larger economies in the world that is still keeping its monetary policy at an ultra-loose setting, and the newly-appointed Bank of Japan governor has no plans to shake things up in the near future.
A great narrative for a rallying market, which is not only caused by local speculators but also foreign ones that are fleeing the abysmal prospects of most Western markets.
Japan’s Nikkei 225 is just about recording a 1.5-year High, which is quite something in itself – but the TOPIX is at a 33-year High (!). TOPIX is a measure of the market capitalization of all stocks listed on the Tokyo Stock Exchange, and a benchmark for capital flow into Japanese equities much broader than the popular Nikkei.
Japan’s equities had been stuck in a famous secular bear market since the 1990’s, which has to date not fully resolved – but steam is definitely picking up.
I could bore you with a chart of either index, but I’d rather grab the bull by the horns and put a teaser for some of the stocks that are currently leading that market below. I can find about 15-20 stocks that are really interesting to me, but there are virtually hundreds of them making new price Highs (as measured over years, a decade, or even all-time Highs).
Liquidity is returning en masse – something this market hasn’t seen in a while. Remember that it’s a smaller marketplace, and thus you can’t expect the same amount of money slushing around. But money can be made … so don’t be dogmatic and insist on your home turf to give you profits when it clearly has no means of doing so.
As a side note – this has been going on for a couple of weeks/months now, and a low but rising number of media outlets are starting to report on the strength of Japanese equities. Hence, we’re likely due for a moderate correction in the indices and thus many of the leading stocks.
