Tags: japan | stocks | tokyo | shares

Japanese Stocks Rebound From Recent Plunge

Friday, 19 Jul 2013 06:40 AM

By Dan Weil

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Japanese stocks are back on the rise, after enduring a 20 percent slump between May 22 and June 13 that resulted from profit-taking and jitters about the government's massive economic stimulus.

The Nikkei Stock Average has rebounded about 19 percent since then, as those jitters have eased. The Nikkei closed down 1.4 percent Friday at 14,608.05.

The ascent is calmer this time around than the torrid 84 percent increase registered by the Nikkei from mid-November to its May peak, according to The Wall Street Journal.

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"A lot of the 'hot money' has dissipated," Kenichi Hirano, a market adviser at Tachibana Securities, told the Journal.

"This allows for a more natural market rise based on hopes for better corporate health and asset appreciation under Prime Minister Shinzo Abe's monetary stimulus and longer-term economic reforms."

In April, the Bank of Japan announced plans to double the monetary base within two years and push inflation up to 2 percent quickly.

Three factors distinguish this stock market rally from the earlier one, market analysts tell The Journal. Trading volume has dropped tremendously, volatility also has declined, and Japan's big institutional investors are more involved in the latest move.

Those Japanese investors have replaced some of the foreign speculators who helped fuel the prior surge.

To be sure, it's no sure thing that stocks will keep rising, some experts say. "Japanese shares have risen quite high, and we need more catalysts to rise further," Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management, told Bloomberg.

"The yen needs to weaken to about 105 per dollar." The dollar traded at 100.47 yen late Thursday afternoon.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.


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