The Nikkei 225 average stock price index (Nikkei index) continues to hit record highs. BlackRock, the world’s largest asset management firm, has expressed its view that Japan is a medium-to-long-term investment destination for the next five years or more.
According to the Nikkei on July 11, BlackRock Investment Institute (BII), a research division under BlackRock, forecasted a bullish trend for the Japanese stock market as a medium-to-long-term investment target for more than five years.
BII stated, “Japan is characterized by mild inflation, shareholder-centered corporate reforms, and the normalization of cautious monetary policy by the Bank of Japan.” It added, “The new small investment tax exemption system (NISA) is expected to stimulate the influx of funds from households to the stock market. Japan is one of the most confident investment targets.”
For investments over five years, BII explained, “Japanese stocks should be allocated at a higher level than the Morgan Stanley Capital International (MSCI) All Country World Index (ACWI), which represents global stock markets,” adding, “The yen depreciation environment might be a risk that operating profits could falter for foreign investors, but it recommends investment in the medium to long term.”
BlackRock upgraded its investment judgment on Japanese stocks from neutral to overweight last September. Then, in March of this year, it revised the outlook for the next six months to a year from plus 1, the third highest out of seven levels, to plus 2, the second highest. This time, it showed an opinion that it “further strengthens overweight (increase in proportion)” in the evaluation for the medium-to-long-term of more than five years.
The Nikkei index, boosted by the record highs of the New York Stock Exchange, has been breaking all-time high records in July.
As of 1:40 PM on the 11th, the Nikkei Index was trading at 42,258, up 1.02% from the day before.
The weak yen effect has made Japanese stocks relatively cheaper, leading to an inflow of foreign investment into the Japanese stock market.
