Hear the Federal Reserve Bank will end its negative interest rate policy, and the Nikkei can recover 40,000 pips?

Views 21672024.05.23
JAPANESE BOOK 225 (.N225.JP)
JAPANESE BOOK 225 (.N225.JP)

18 March$Nikkei 225(.N225.JP)$Once again forcing the close to 40,000 point barrier, market attention on March 19Bank of JapanA new interest rate policy will be announced after the meeting, including the end of the yield curve control (YCC) policy, which is expected to begin in April. Japan will move away from negative interest rate policy and maintain zero interest rates for a long time as the Japanese economy improves.

What changes will the Bank of Japan's message bring to the yen and the Japanese stock market?

Before discussing this point, we need to understand that we first understand the upswing of the Japanese stock market and the current situation facing the Japanese economy.
The Nikkei index crossed the 40,000 mark this year to reach a high of 40472 points, the highest level in the history of the Japanese stock market and a high of the index since 1989. Economically, the index crossing this mark also represents the Japanese economy's 30-year exit from a quandary, which has also attracted global investor attention. In early March 2024, the total market value of Japanese stocks listed on the Japanese stock exchange jumped to over ¥1 trillion, and rightfully ranked third in the world, following in the footsteps of the United States and China.

Japanese stocks jump in total market value
Japanese stocks jump in total market value

An analysis of the reasons behind the rise in Japanese stocks and a little about the predictions for the future

The strong performance of the Japanese stock market was supported by the strong performance of the “day appreciation concept”. Over the years, the Tokyo Stock Exchange continues to help companies whose stock prices are below book value and severely undervalued asset value develop capital improvement programs, and urge and encourage Japanese blue-chip companies to increase dividends and share buybacks, further strengthen corporate governance, and actively engage in the exploration of new technologies This is also the origin of the concept of “day-specific valuation”, such as research and globalisation competition.

Buffett Increases Five Business Companies in Japan
Buffett Increases Five Business Companies in Japan

SpeakingJapanese stocks, of course, “God of God” Buffet. On February 24, Burkhill Hasawi of Buffett released its latest financial statements and issued an annual letter to shareholders, which spoke extensively about the Japanese company and said that Foxx would maintain its investments in five Japanese businesses indefinitely. Buffett's preference for the five largest Japanese merchants in Ito-Tadata, Maruho, Mitsubishi, Mitsui Properties and Sumitomo dates back to 2020. Since then, his shareholding ratio in five of Japan's largest commercial enterprises has grown to more than 8.5% by the end of June 2023, rising to 9% today.

In fact, in addition to the shares invested in by Buffett, the reform measures of many Japanese companies have worked. Many Japanese companies have experienced a sharp downward trend in net debt levels over the past few years, coupled with low cost controls, and corporate profitability and cash flow have attracted investors' attention. From a macroeconomic point of view, Japan's economy is also likely to undergo significant changes, with the prospect of an end to the shrinking problem. For example, in the previous Japanese “Spring Battle”, trade unions achieved an average increase of 5.28% in total wages, for example.Bank of JapanThe end of negative interest rate policy paves the way. The market generally believesBank of JapanThe end of many years of negative interest rate policy will lead to the normalization of Japanese interest rates.

Normalization of Japanese interest rates is more favorable

Normalization of interest rates is the catalyst for further increases in the Japanese stock market. When many investors first heard about the Bank of Japan's rate hike, they began to think that local liquidity in Japan would narrow and the yen would rise, causing the Japanese stock market to fall. Short-line vibrations are possible for individuals to detect in the wake of speculative hype, but there is little chance of this logic being released in the long run. Since interest rate normalization also means that the local economy is gradually improving and will be beneficial to the profitability of local businesses under fundamental support; the optimistic assumption is that taxes are more likely to help with local government debt problems and even stimulate local population birth rate problems as a result of improved economic activity Change. In addition, changes in interest rate policy by the Bank of Japan will lead to the appreciation of the yen, but will also encourage the flow of international capital into the Japanese market, which will benefit the economic performance. The best example is the interest rate hike cycle in the United States at the end of 2015.


The Japanese stock market will also change a lot, and international investors have been investing in the past few yearsJapanese Stock MarketBoth yen and US dollar hedging needs to be hedged, but with the central bank likely ending its negative interest rate policy this yearUS Interest Rate ReductionThere is still a possibility that some interest rate activity will lead to a close or even a closing activity, thus driving the yen andJapanese Stock MarketThe surface of the elevator is found. This visit and the way in which Futu invested early in the exhibition has not changed.

Choosing a Japanese ETF

On the assumption that the yen and the stock market double, the proposed 2024 Japanese equity ETF will be “hedge-free”Japanese Stock ETF, SELECT FOR ENTRY TYPE.

Southern Daily Book 225 (03153.HK)
Southern Daily Book 225 (03153.HK)
Japan ETF-iShares (EWJ.US)
Japan ETF-iShares (EWJ.US)



How to trade with Futu?

Before investing (buying and selling) stocks, you first need to open a securities (stocks) account. Just like depositing money in a bank, you need to open a bank account first.

Securities (Stock) Account Opening Process

Step 1: Head over to the Futubull network and sign up for a new account.(Register now)

Step 2: Open a securities account on the basis of the Futu account.(Open account now)

Step 3: Fill in your personal and financial details (includingBank Code and Account Number), and then deposit funds via EdDA Quick Deposit, Fast Transfer (FPS), Bank Transfer.(Invest immediately)

Step 4: Download the Futubull Customer Portal and log in.(Download now)
>> Futu Securities offers 5x24 hours trading of individual US shares and free LV2 emotions, open your wallet now and enjoy new rewards



The author is a licensee of the Securities and Exchange Commission and its affiliates do not have a financial interest in the proposed issuer of shares mentioned above

Senior Strategist, Futu Securities

Tam Chi Lok

One-stop trading with Futubull

Enjoy welcome rewards and lifetime 0 commission on HK stocks

Terms and conditions apply right-arrow

| GENERAL DISCLAIMER |

This report (the “Report”) is prepared by Futu Securities International (Hong Kong) Limited (“Futu Securities”). The person who retained this Report either via receiving and/or reading  (including any relevant attachment), shall agree to be bound by the terms and limitations set out below as has the right to retained this Report. Any failure to comply with these limitations may constitute a violation of the law.

This Report shall not be reproduced in whole or in part, distributed or published by you for any purpose. Futu Securities shall not be liable for any direct or consequential loss arising from any use of material contained in this Report.

The information contained in this Report has been obtained from public sources which Futu Securities has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this Report are based on such information and are expressions of belief only.

Futu Securities has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in this Report is subject to change, and Futu Securities and/or its affiliated companies (collectively the “Futu Group”) shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will Futu Securities be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages.

Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this Report are as of the date indicated and are subject to change at any time without prior notice.

This Report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. This Report should not and does not constitute an offer, solicitation, invitation, recommendation for buying or selling of investment products or as basis on making any investment decision, or constitute as professional advice from any member of Futu Group. The products mentioned in this Report may not be suitable for all investors and a person receiving or reading this Report should seek advice from a financial adviser regarding the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.

This Report should not be relied upon as authoritative without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this Report has been made available constitutes neither a recommendation to enter into a particular transaction nor a representation that any product described in this Report is suitable or appropriate for the recipient. Recipients should be aware that many of the products which may be described in this Report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.

This report is provided by Futu Securities, which is regulated by the Securities and Futures Commission of Hong Kong (SFC) in Hong Kong. If you have any questions about the Futu Securities Research Report, please contact Futu Securities. The CE number of SFC held by the author has been disclosed next to the author's name on the front page of the Report.

Nothing in this Report shall be construed to be an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in this research should take into account existing public information, including any registered prospectus in respect of such security.

| Certification |

Analyst(s) certified that (i) the views expressed in this Report accurately reflect his/her personal views on the listed corporation in this Report; and (ii) no part of his/her compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this Report.

Analyst(s) certified that he/she and/or his/her associate did not deal in or trade the listed corporation or its relevant securities within the 30 days prior to and 3 business days after the issue of this Report.

| Disclosure of Interest |

Analyst Disclosure: Neither the analyst(s) preparing this Report nor his/her associate has any financial interest in or serves as an officer of the listed corporation covered in this Report.

Firm’s Disclosure: Futu Securities does not have any investment banking relationship with the listed corporation covered in this Report in the past 12 months nor any financial interest of 1% or more of the market capitalization in the listed corporation. In addition, no executive staff of Futu Securities serves as an officer of the listed corporation.

| Availability |

The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Futu Securities to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.

Information contained herein is based on sources that Futu Securities believed to be accurate. Futu Group and/or relevant personnel (i.e., employees of Futu Group) may have positions and transactions in relevant investment products. Futu Group and/or relevant personnel does not bear responsibility for any loss suffered by the investor from the use of or reliance on the information set out in this report.

For details of different product's risks, please visit the Risk Disclosures Statement on http://www.futuhk.com.

This Report is written in Chinese and English, and the two versions are equally valid. If there is any contradiction between the two versions, the English version shall prevail.

Recommended