VETERAN investors well remember the last time Japan’s benchmark Nikkei index closed at 20,000, the sort of round number that pundits call “psychologically significant”. It was in April 2000, and the Nikkei went on to shed more than half its value over the following three years. So it was unsurprising that the dominant emotions elicited by the news on April 22nd that the Nikkei had closed above that level were shock and some foreboding. Earlier in the month, as the index approached the threshold, the economy minister suggested that there might be a “small bubble”.
For the non-Japanese buyers who normally dominate trading in Tokyo, the market presents a conundrum. In 2013 many of them piled into Japanese shares on hopes that Shinzo Abe, the new prime minister, would rid the economy of deflation by means of monetary easing. When the economy stalled last year, many sold their holdings. Scepticism about “Abenomics” remains. But Japan’s stockmarket is one of the best-performing in the rich world this year in dollar terms; staying away is turning into a “pain” trade, says Peter Tasker of Arcus Research, a consultancy.
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from The Economist: Finance and economics http://ift.tt/1DmQVCv
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