A jump in overseas buying of Japanese stocks may end on mounting investor concern that the government cannot stop the yen from resurging, said Shane Oliver, head of investment strategy at AMP Capital Investors.
Overseas investors bought a net ¥1.78 trillion (US$19 billion) in Japanese stocks last year, with ¥1.3 trillion of net purchases last month, more than in any other month, according to data based on exchanges in Tokyo, Osaka and Nagoya released by the Tokyo Stock Exchange on Thursday. Japan’s currency weakened to ¥93.37 against the dollar yesterday from a 14-year high of ¥84.83 in November. A weaker yen boosts revenue from exports when converted into the local currency.
“It’s hard to get excited about Japan,” said Sydney-based Oliver, who helps oversee US$89 billion globally. “Until we see concrete action by Japanese authorities, it’s hard to see a sustained turnaround in the value of the yen.”
The benchmark Topix index climbed 5.6 percent last year, the lowest return among benchmark indexes of the world’s 40 largest stock markets, as a strong yen hurt exporters’ earnings. The yen traded at its highest annual average to the dollar last year since currencies became freely exchangeable in 1971.
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