The Nikkei index has seen an unbelievable Bull run since the beginning of 2013. In December it was sitting at ~9500, and has since risen to a peak of almost 16,000, a rise of 68%.
Reasons for the rise
As in my previous blog post, the Nikkei has been heavily bolstered by the promises of Abenomics, and also by the significant QE programs, which are acting as an incentive to invest in equities.
Investors around the world as also hungry for high yielding stocks, and once the Nikkei gathered momentum investors were keen to cash in.
The Nikkei has recently suffered a quite dramatic decline, a combination of investors wanting to cash their earnings, and also the addition of emotional momentum downwards, as investors begin to panic that they’ve invested in a bubble.
As a cautious investor I would be very weary about investing now, being individual investors we should be looking at contrarian trends and not riding the waves, it is too likely that we will invest as the market peaks. Saying that, it is definitely worth researching companies that are likely to benefit the most from Abenomics, and possibly following them closely, the program isn’t likely to die down anytime soon and these companies could benefit from the program for many years to come.
Your thoughts on the Nikkei are most welcome, tweet me on @Breadeconomics or leave a comment.