Define irony. Literally hours after financial entertainment outlet CNBC wrote an article in which it said that“As fourth quarter kicks off, there’s one market in Asia that has investors excited: Japan” the Nikkei crashed.
First, some more humor from CNBC, which quotes JPM who apparently does not realize that crushing your currency to generate nominal gains is a zero sum game, and instead of pitching Japan as the next big thing, he should be focusing on the “upside” in Venezuela or Argentina:
The world’s third largest economy may be struggling to shake off the drag from the sales tax hike that took effect in April, but a weakening yen, improving corporate profits and attractive valuations will likely power gains in equities in the coming months, say strategists.
“We are going to get a combination of value meeting growth – the Japanese market is cheap – so there’s value, and on top of that we are going to get earnings growth,”said Jesper Koll, head of Japanese equity research at JP Morgan Securities Japan. “
Koll’s optimism was shared by several other strategists.
“We’re overweight Japan. Abenomics is making progress, albeit slowly, the yen continues to weaken, which is good for stocks, and pension fund reform is a huge potential catalyst,” said Simon Grose-Hodge, head of investment advisory, South Asia at LGT Bank.
So yes, entertainment that is free and funny: a great combination.
In the meantime, someone in Japan finally read Zero Hedge articles from early 2013 which were warning about precisely the kind of hyperstagflation that Japan is currently experiencing. That someone happens to be the former finance minister Hirohisa Fujii who in an interview yesterday, said that further falls in the yen may lead to market intervention.
You read that correct: not yen increases, falls! Which, coming just as the USDJPY touched 110 before plunging nearly 150 pips overnight, appears to have been heard loud and clear.
