Japan - Our top pick of the markets 2013
“We also think the rally in the Nikkei would far outweigh a plunge in the yen, but of course, one of the beauties of spread betting the Nikkei, is the fact that the devaluation risk is taken away from you as the bets are denominated in sterling.�
CHART - NIKKEI V S&P
So, what is likely to happen to the Japanese stock market if the politicians can rid the country of deflation once and for all? A comparable period is, of course, the US in 1933 and which sparked a huge rally.
One thing that never changes is human nature, and a new generation of Japanese are likely to rediscover the equity market over the next few years. Japan remains our top pick of the global equity markets through 2013.
For the Japanese consumer who currently considers the JGBs as savings, should the capital value of these erode through rising yields, then a veritable tsunami of domestic money would likely hit the equity market as the public chased yield and capital returns again.
January 2013
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