Nikkei Index Loses Third of Its Initial Gains Under Abe

posted by Richard Katz on May 11, 2014

Found in Japan, categorized in Growth Outlook and Business Cycle

Tags: Japan Nikkei index

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Nikkei Index Loses Third of Its Initial Gains Under Abe


Tokyo stock prices so far in 2014 have had worst performance among 83 bourses, except for Russia
30% of the entire gains made since the announcement of the 2012 election have been erased; stock prices are now below year-ago levels
Key has been change among foreign investors, the key swing factor in the market
From November 2012 to December 2013, foreign investors were net buyers to the tune of ¥16.7 trillion ($163 billion); during January-April of this year, they have sold a net ¥1.4 trillion ($13.6 billion)
Foreigners are lost faith that Abenomics will lift growth and therefore long-term profitability
Abe is trying a number of moves to lift stock prices, beyond calling for foreign investors to "buy Abenomics" whenever he can; this includes having government-controlled funds buy more stocks and possibly lowering the corporate income tax (which could help stock prices but will have little impact on capital formation rates)
Today’s stock prices are 24% below the pre-recession peak in June 2007, while the S&P is up 21%

About Richard Katz

Richard Katz is Senior Fellow at the Carnegie Council for Ethics In International Affairs, the New York correspondent for Weekly Toyo Keizai, a leading Japanese business magazine, and formerly the editor of The Oriental Economist Report, a monthly newsletter on Japan.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails and has just finished a third book on reviving entrepreeurship in Japan.

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