The Japanese benchmark stock index Nikkei 225 reached the highest level in more than two decades in today’s trading. Nikkei closed at 20881 today, which is the highest level for the index since December 1996.
The key question here – Will the Bull Run continue?
We at FxWirePro think it will. We would like to urge our readers to maintain long positions in the Nikkei 225 with an expectation of around 12 percent gains over this year and the next and the reasons are,
- Bank of Japan (BoJ) will maintain its current expansionary monetary policies. It will be one of the last major banks to withdraw the stimulus.
- The central bank also admitted that the economy is firing on all its engines and growth is expected to be above average.
- Though the current steel scandal is casting a shadow over the Japanese markets, the companies are very much expected to beat earnings estimates as the third quarter earnings season is set to kick off.
- The current account to GDP ratio remains well above its long-term average and is slowly approaching its all-time high at 4.7 percent. The ratio is currently at 3.7 percent.
- Terms of trade have improved for a third consecutive month in August.
In addition to that, weak yen compared to its major trading partners will continue to support stocks.
