A man walks past an electronic stock board showing the Nikkei index at a securities firm in Tokyo on Friday. Photo: AP/Eugene Hoshiko
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Nikkei ends at 30-year high as stimulus hopes lift Wall Street

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16 Comments
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Boggles the mind! People are starving and committing suicide while the market skyrockets.

10 ( +11 / -1 )

It's not stimulus hopes but low interest rates and QE that's increasing stock prices.

5 ( +5 / -0 )

@Reckless

Boggles the mind! People are starving and committing suicide while the market skyrockets.

Stock market and real economy were losing its all connection since 2008.

2020 March was the time that, the process gets completed.

No meaning to watch stock market to have an indication about business performances or about economy anymore.

This is not only about Japan, it is about anywhere in the world from Zimbabwe to Turkey right now.

6 ( +6 / -0 )

Based on what Ray Dalio talked about here. Devaluation is probably the only solution for Japan.

https://www.youtube.com/watch?v=AhDrvQiNV5M&ab_channel=wonkmonk

It appreciates the asset prices, mostly stocks, that benefit the rich class greatly. Those shareholders are now mostly foreign. The wild ride that you saw in Nikkei in the last few months is the action of the BoJ monetizing the debts and buying up private assets.

The BoJ is now the biggest shareholder in Japan. The wild ride seems to me is more of a shadowy capital flight where Japanese elites are transferring out of Japan.

https://www.bloomberg.com/news/articles/2020-06-18/there-s-a-flood-of-japanese-money-rushing-into-dollar-assets

At the same time, I also include the China factor here because I have reports from my friends in finance that many Chinese elites are searching for ways to bring money out of China. Xi's regime has tightened capital flows and prepared to wage a long war against the USD. Access to the USD and Gold has been restricted in China. Using Japan as a gateway to America has always been a popular lever for Chinese businesses.

The wild ride in Japanese stock markets will only end when Japan lost its edge in export manufacturing. Because of either working population collapse or industrial replacement by China/Vietnam/India. I calculate it will be happening within the next 10 years as Japan failed to handle Covid-19 and bring Olympics 2021. With no actual physical economy to back up ridiculous monetized debts, The Bank of Japan will inevitably declare a default. The Yen will experience hyperinflation worse than Weimar Germany, and no one will have any business with Japan ever again.

9 ( +13 / -4 )

@Septim Dynasty

There is one big problem with what you wrote.

The Japanese for printed money from BOJ buy overseas assets as well.

Not all countries in the world have the possibility to endless print strong money which YEN is still is. For that money regular people, the government officials can buy anything overseas in Myanmar, Vietnam, India etc.

I read it almost every month in the newspaper:

Vietnam coal power plant receives a loan from Japan;

Phillippines receives a loan for calamity response;

Mauritius got loan from Japan;

and many many more....

With that being said those loans need to be repaid. Even if YEN collapses and the monetary system will go down still you have a nice balance sheet as liabilities will remain.

-4 ( +1 / -5 )

@Septim Dynasty

Very interesting, thank you for your comment!

2 ( +2 / -0 )

The Bank of Japan will inevitably declare a default. The Yen will experience hyperinflation 

I think a "default" would be done by the Ministry of Finance, if it is their ridiculous debts that is in question.

But given that the Bank of Japan is buying them up willy-nilly (and would be the prime defaultee), and that the government has shown no serious signs of reducing the debt burden for pretty much 20 years, and that the Bank of Japan also now holds lots of risky stocks, there is a concern in me too that the yen issued by the Bank of Japan won't always be worth so much as it is at this time.

My financial assets will primarily be invested offshore for probably the rest of my life.

6 ( +7 / -1 )

The Japanese market is poised for huge gains next year as the Trump debacle reverberates through Asia next year.

Trump just showed all of us how fragile their society really is. Asia will be the engine of world growth when this pandemic ends for many years to come.

-3 ( +2 / -5 )

The Yen will experience hyperinflation worse than Weimar Germany, and no one will have any business with Japan ever again.

Sure, has the sky hit you yet?

-5 ( +2 / -7 )

For the whole S&P 500 the PE ratio is now over 38. On average the last 100 years its has been around 15...go figure.

0 ( +0 / -0 )

stimulus hopes lift Wall Street

Dolt 45 will take all the credit!

0 ( +0 / -0 )

Yes, we've all been hearing about future vast inflation, monetizing the debt, Japan sinking into the ocean from debt, total economic destruction of currency, etc. for the last 40 years.

Yawn.

0 ( +1 / -1 )

You guys all have it incorrect!! The biggest product for Japan is its PEOPLE! As long businesses are in business and people are alive and working taxes has to be paid!! Thats where the money comes from.

2 ( +2 / -0 )

Not all countries in the world have the possibility to endless print strong money which YEN is still is. For that money regular people, the government officials can buy anything overseas in Myanmar, Vietnam, India etc.

Because Japan is still being backed by strong export manufacturing. People still believe in Japanese industries which are now pretty much owned by the West anyway. Kioxia and Toshiba all have their facilities taken over by Westerners. This is the only thing to make Yen strong but it is also a huge weakness for the current state of the Japanese economy. An appreciated currency is terrible for an export economy.

Additionally, there is also the help from the Americans where they still grant Japan privilege access to core technological supply chains as well as high-end industrial markets. Japan's last source of profitable trade surplus is through machinery exports (thanks to American supply chains) where they use this surplus to buy more American assets. This effect also empowered the Yen more.

I know a lot of galactic minds here keep claiming that Japan does not rely on outside economic helps. It is all domestic-based! Yes. Why does the quality of life keep getting worse every year? There is no one in the world better off if they solely rely on the domestic economy unless they think North Korean.

Everyone wins in free trade. Someone loses in free trade when one does not sufficiently prepare - having good monetary policies and a productive economy, both must work at the same time.

Vietnam coal power plant receives a loan from Japan;

Phillippines receives a loan for calamity response;

Mauritius got loan from Japan;

and many many more....

This is a small fact that many people do not know. Those loans are actually re-financed by American money. It is not really Japanese money rather than Japan uses its outstanding national credit to borrow from American banks to finance those loans. Many of these developing nations do not have AAA ratings to gain high level of loans from international finance institutions and banks. Japan has been playing the middle man for developing countries in decades now.

China and Vietnam are probably the most successful stories where both nations utilized the name of Japan to gain insane access to international credits and loans.

With that being said those loans need to be repaid.

South Korea proved it wrong - I personally think China urged Moon to do it, so they can test Japanese hard and soft power. The fiasco in the Korean comfort women affair demonstrated that Japan does not have either soft or hard power. Korean government seized Japanese assets with no issue, and the sanctions of chemicals against South Korea do not seem to do much.

Imagine if China or the US does it, Japan will gravel in fear.

Even if YEN collapses and the monetary system will go down still you have a nice balance sheet as liabilities will remain.

No currency collapse will affect the world unless it is the USD. Yen lives because it is backed by financed trade surpluses to buy American assets/bonds/IOUs.

I think a "default" would be done by the Ministry of Finance, if it is their ridiculous debts that is in question.

Debt monetization means that all debts are transferred from governments to central banks. Japan is no longer in the 1990s as the Bank of Japan is now entirely independent (with suspicious Western influence and control, filled with Wall Streets puppets).

If Japan ever defaults, The Bank of Japan will do it. I assume if 235% (all) of Japanese debts, in government and private, are all transferred to the central bank.

Trump just showed all of us how fragile their society really is. Asia will be the engine of world growth when this pandemic ends for many years to come.

China, India, and Southeast Asia (mostly Vietnam because it will be a perfect replacement for Hong Kong as the place for China-the West exchanging stuffs).

Sure, has the sky hit you yet?

Better than sleeping in the Nihonjinron land, buddy.

7 ( +8 / -1 )

If Japan ever defaults, The Bank of Japan will do it. 

The Bank doesn’t owe the debts, it owns them, or 45% anyway. Life insurance companies etc own the rest.

The debt is owed by the Ministry of Finance.

If there were a default the owners will all be defaulted on.

0 ( +0 / -0 )

The Bank of Japan will do it. 

There is no such thing as central bank insolvency. There's no one to make claims against it.

0 ( +0 / -0 )

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