Nearly 25 years after peaking in 1989 the Nikkei 225 (INDEXNIKKEI:NI225) has rediscovered its mojo in a big way. Though it still needs to more than double to get back to its former glory, the index is up 43% for 2013 and nearly 80% over the last two years. Mark Luschini of Janney says the Land of the Rising Sun is winning by borrowing an idea from the U.S. and repurposing it to fit its own needs.
Under Prime Minister Shinzo Abe and his Abenomics plan Japan is attempting to jump start the economy through massive stimulus and inflation. As demonstrated by the news earlier this week that growth is less robust than anticipated there have been some fits and starts. Regardless there are signs of traction and Japanese stocks have obviously performed. The Japanese are “out central banking us,” says Luschini in the attached clip. “(Japan) In terms of the sheer size of their balance sheet as a percentage of their GDP when compared to expansionary U.S. policy is more aggressive.”
Japanese multinational corporations are getting a boost through a weak yen and huge tax breaks, but what investors worry about is sustainability. Long term investors have seen more than one Japanese recovery fail in the last ten years. The country is still facing debilitating debt problems and a rapidly aging population; problems not easily solved by monetary manipulation.
You can see the full “Breakout” segment below:
Related: WisdomTree Japan Hedged Equity Fund(NYSEARCA:DXJ), DBX ETF Trust(NYSEARCA:DBJP)
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