The Nikkei Index reaches 20.000 points
After more than 15 years, this index that represents the performance of the major 225 companies of the Japan market, has reached again level 20.000 points. Is this a sign that the reforms of Abenomics have been successful? There are many doubts about that. We can’t forget that this index topped 40.000 points some 25 years before. However the index has performed 15 % from the beginning of the year.
The Japan’s major companies’ shares have been bought by private investors and public institutions. The firsts have bought them for the major profit expected and the seconds to bring back confidence to private investors. The profit of the companies has been boosted by the weak currency. The major part of the companies that compose the Nikkei Index are exporters. Investors expect from major exporters to raise dividends the next quarter and this is a strong sign that profits will continue to raise also next year because the Yen is expected to remain weak for as long as the Central Bank will continue with the buying program.
In fact the macro picture of the Japan economy doesn’t look as brilliant as the market tells. The last picture offered by the institution of statistic shows that the economy of Japan is back into deflation. This has been the worst nightmare for the country in the last 25 years. The major target of the Abenomics reforms has been fighting the deflation and second boosting the economic growth. If all the money printed by the central bank and the taxes increasing by the government were not sufficient to increase inflation what other can Mr. Shinzo Abe invent? The result was that the money printed did increase the Nikkei Index and the government taxes have brought the economy back into recession the last quarter of last year.
Now the only hope remains that the fast growing of the markets will have an impact on the consumer’s and investor’s confidence and the most indebted economy in the world will restart to grow.