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The stock market in Japan has recently risen to the level seen during the bubble economy. With the US restricting semiconductor exports to China and China also interfering with US purchases of semiconductors, the war on semiconductors is raging.
Expectations that the depreciation of the yen has bottomed out due to the effect of the quantitative easing policy, which is one of the largest ever, and efforts to eliminate the low valuations of Japanese companies have been evaluated as driving the rise in the Japanese stock market. there is There is also a view that the Nikkei Stock Average will reach 40,000 yen in the not too distant future.
Japan regaining lost 30 years
On May 31st, the Nikkei 225 index closed at 30,887.88, down 1.47% from the previous business day. This is the highest level since July 1990, just before the end of the bubble economy.
The Nikkei index is up more than 20% so far this year. KOSPI (15.79%), Shanghai Composite Stock Index (2.83%), major stock markets in Asia, as well as the US (9.97%) and European (10.44%) stock markets are showing high rates of increase.
Foreign investment funds that flowed out of China are believed to be flowing into Japan. Foreign investors have bought nearly 30 trillion won of Japanese stocks this year alone. Japan's stock investment in April was 45.7775 trillion won, the highest since 2001.
Analysts say that special demand will head to Japan amid the intense semiconductor friction between the United States and China. U.S. Commerce Secretary Gina Lemond and Economy, Trade and Industry Minister Nishimura announced the Japan-U.S. Commercial and Industrial Partnership (JUCIP) statement in Detroit on the 26th. U.S. semiconductor company Micron, which has been sanctioned by China, has announced plans to invest in Hiroshima.
Berkshire Hathaway chairman Warren Buffett's visit to Japan also helped the stock market. Buffett sold all 8.2 million shares of Taiwanese semiconductor company TSMC, which he bought in 2022, in the first quarter of this year, saying, "TSMC is one of the most important companies in the world, but the company's position is a problem." During a visit to Japan in April, he said, "Fifty years from now, Japan and the United States will be more developed countries than they are now," and said that he had increased his stake in Japan's five major general trading companies to 7.4%. It was determined that Japanese companies were more attractive than geopolitically unstable Taiwanese companies.
Expectations that the depreciation of the yen will only lead to a rise in Japanese stocks are also pushing up the Japanese stock market. Normally, if the yen began to depreciate and then start to recover, there was a high probability that the Japanese stock market would outperform. He hopes that if he buys Japanese stocks when the price is low, he will be able to sell the stocks when the yen appreciates and gain foreign exchange gains. The dollar/yen pair is currently trading at around 140 yen to the dollar.
The fact that Japanese companies are striving to eliminate the chronic low valuations is also leading the boom in the stock market. From the end of 2022, the Tokyo Stock Exchange will encourage companies whose PBR is less than 1x to analyze the causes of their low ratings and prepare and publish plans to resolve them, and Japanese companies have responded. According to CNN, share buybacks by Japanese listed companies in fiscal 2022 will reach an all-time high of about 9.7 trillion yen.
Some say that if the current trend continues, it will only be a matter of time before the Nikkei Stock Average exceeds 40,000 yen. UK Geno Asset Management predicts that the Nikkei Stock Average will exceed 40,000 yen in three years if Japanese listed companies improve their capital efficiency as requested by the exchange.
But despite the barrage of good news, corporate profits have been sluggish, and stock markets are hampered, especially by the lack of signs that stock prices will rise. Shinhan Investment & Securities researcher Kim Sung-hwan said, "While the Japanese market is being re-evaluated, the 12-month leading PER has increased by 20% compared to the bottom, but this is the lowest price in the middle of 2010. The attractiveness remains unchanged," but added, "However, there are still no signs of improvement in overall Japanese corporate profits, which is different from the positive outlook for profits in the US, European and Korean markets." If the stock does not rise, it is analyzed that there may be a limit to foreign buying and further upward pressure.
2023/06/05 09:25 KST
