Today, the Nikkei 225 index opened 064%，38508.The opening price at 07 points is 38915 from the all-time high**8 points difference of only about 1%, intraday driven by the sharp rise in Japanese chip stocks, Japanese stocks opened higher throughout the day, the Nikkei 225 index ** broke through the "bubble period" historical high to close at 39098At 68 points, the Nikkei 225 index has been **16 so far this year84%。
Compared to Japan's record high in 34 years, which was recognized as a bubble, this time Japan*** is regarded as the rebirth of Japan**, and global investors led by Warren Buffett have poured money into the country, betting that Japan will finally get out of deflation and embark on the path of sustainable growth.
Bruce Kirk, chief Japan** strategist at Goldman Sachs, said: "Since the bubble burst in December 1989, Japan** has been plagued by all-time highs. No matter how well the Japanese have performed since the market bottomed, the market is always skeptical, always comparing the current performance with that "high water mark". Now that Japan has finally broken through this all-time high, it is not only a numerical victory, but also a psychological liberation. ”
In the face of Japan's ** breaking through record highs, most analysts and investors believe that this time is different from 34 years ago, BlackRock, JPMorgan Chase, Robeco Asset Management, BNP Paribas and other institutions believe that Japan's ** foundation has become more solid. A more shareholder-friendly corporate culture has been established, and the steady growth of Japan** is more attractive to those who have suffered losses in other market turmoil, and the rally in Japanese stocks is likely to continue.
However, it is worth noting that in the process of this round of Japan** recovery, local Japanese institutions and ** are continuing to sell Japan**.
Warren Buffett continues**, and the value of Japanese stocks is highlighted.
If you want to find a starting point for this round of Japanese stock bull market, Warren Buffett's start of **Japanese trading company** in 2020 can be regarded as a landmark event.
In 2020, Berkshire Hathaway became one of Japan's top five general trading companies for the first time. In April 2023, Berkshire Hathaway just announced an increase in the investment ratio of Japan's five major conglomerates – from 5% to 74%。
At the 2023 Berkshire Hathaway shareholder meeting, Warren Buffett used his typical logic to explain the reason for holding shares in Japanese trading companies.
Things in Japan are simple. Warren Buffett said, "I like to look at the company's data. Here are five very, very reliable companies, companies that can understand. ”
Trading companies are a unique form of business in Japan, and the five largest trading companies in Japan represent some of the largest industrial groups in Japan.
ITOCHU Corporation, for example, has a wide range of industries in the fields of textiles, garments, machinery, metals, energy, chemicals, food, grains and oils, real estate, finance, and consumption.
ITOCHU Corporation launched Japan's first private communications satellite, JCSAT-1, and also produces nonwovens for baby diapers, and of course includes some mass consumer brands in its vast industrial matrix: FamilyMart, Dole Banana, and so on.
With Warren Buffett's optimism, Japan's five major trading companies** continue to flow in, and the stock price has also risen.
From the first trading day of 2023 to February 20, 2024, for more than a year, the stock prices of Japan's five major general trading companies have been in the red: Mitsubishi Corporation**12731%, Mitsui & Co.**7118%, Sumitomo Corporation**6997%, Marubeni**6918%, ITOCHU Corporation**6422%。
Behind Warren Buffett's bet on the success of trading companies is essentially a bet on Japan's monetary policy pivot.
In the three decades that Japan is known as lost, Japan has long adopted a policy of low or even negative interest rates, and with the current inflation in Japan** and the Bank of Japan's announcement to end negative interest rates, more and more overseas capital has begun to bet that Japan's prosperity has an endogenous momentum rather than relying on the rising tide caused by the Bank of Japan's money printing.
It took a long time for global investors to accept that Japan has changed," said Jonathan Garner, chief Asia strategist at Morgan Stanley, which was one of the first major brokerages to recover in the Japanese market. Now, he said, as corporate earnings continue to grow and profitability improves, more overseas investors agree that "Japan is in a long-term bull market."
Market capitalization management may catalyze the continuation of Japanese stocks**.
In addition to the changes in the macro environment, another factor for investors to bet on Japan's continued future is that many companies are simply too cheap.
Over the past three decades, there has been another dramatic change: in 1989, Japanese companies accounted for 32 of the top 50 companies in the world by market capitalization. Today, only one Japanese company, Toyota Motor Corporation, is in the top 50 list, which means that the valuations of large Japanese companies are not currently overvalued globally.
At the end of the 80s, due to the soaring assets, Japanese banks became real heavyweights in the market. But now that the Japanese market is more balanced and diversified, the constituents are no longer all financial stocks, but include Sony Group, the parent company of casual clothing chain operator Uniqlo, and companies that occupy important positions in the vast semiconductor chain, such as Tokyo Electron***, which has benefited from a surge in orders from China
At the same time, even after this year's session, many Japan** remain in the doldrums, with 37% of Nikkei constituents trading below their book value. Theoretically, this means that investors may make more profit by going through the entire assets of the company than by continuing to hold the company. This amounts to a vote of no confidence in management, but it also means that there is upside potential if the business is managed properly.
In contrast, only 3%** of the S&P 500 are trading below book value (price-to-book ratio below 1). Only one in five of the Euro Stoxx 600 indices** fall into this category. Japan's current low valuations are in stark contrast to 1989, when assets** were at the other extreme.
In the face of the phenomenon of long-term net breaking in Japan, the Tokyo Stock Exchange has also begun measures to guide market value management.
On March 31, 2023, the Tokyo ** Stock Exchange issued the "Requirements for Realizing the Operation of Concerned Capital Costs and Stock Prices", which further promoted the expectation of improvement in the valuation of Japan** from the institutional level. In terms of valuation, the "Requirements" focus on the listed companies with a price-to-book ratio of less than 1 time, the listed company should explain and explain and improve the situation. The specific methods include: first, repurchase, encourage market value management through repurchase to improve price-to-book ratio and ROE; the second is to adjust the corporate strategy in a timely manner; the third is to pay attention to the rate of return on capital; Fourth, actively create and institutionalize information disclosure channels.
Therefore, even though Japan** is currently at a record high, there are still many investors who believe that ** has potential.
Some ** managers now believe that the Nikkei 225 could make significant gains in the future. "I think it could easily reach a level like 42,000,000," said Richard Kaye, portfolio manager at Comgest Asset Management, adding that a return to previous historical levels would have a "huge psychological impact" on Japanese investors.
Foreign capital **, domestic capital sells.
While foreign investors are optimistic, there is also an interesting phenomenon: as the index approaches a historic high, some local Japanese financial institutions are even selling out, and some ** are also hovering.
In the week of February 5-9, Nippon Trust Bank has been net sellers for the fifth consecutive week, selling 549 billion yen (263.).4.8 billion RMB).
Individual investors are clearly a bit more emotional. In the third week of January 2024, individual investors in Japanese stocks were net sellers for six consecutive weeks, and there seemed to be a trend of escaping. But as the index continued to rise, the mood reversed and turned to **. In the week of February 5 to 9, individual investors had a net ** 227.7 billion yen (109.).2.9 billion RMB), which has been net for three consecutive weeks.
In response to this phenomenon, Wang Jian, a strategic analyst at Tianhong, said, "The market and capital inflow are mutually reinforcing, and the mood fluctuates after the stage high, and the fear of heights and the impulse to increase positions will also coexist, but on the whole, the market is more inclined to buy more and more, following the market." ”
Of course, the proportion of the Japanese market is not high at present.
But Japan has also experienced an era of **, at its peak, individual holdings accounted for 37% of market funds7%。But with the decades-long downturn since the bubble burst, the proportion of individual holdings has continued to decline. There is even a phenomenon: due to the gradual aging of shareholders in the bubble era, a trend has been formed for elderly shareholders to cash out the first to facilitate the division and inheritance of property by future generations.
By 2019, the percentage of individual shareholdings in the Japan** market reached an all-time low: 165% – compared to the United States across the ocean, the figure is 35% for the same period.
But after that, with the recovery of ** and even the arrival of a bull market, this number began to rise. Also in July 2023, the Tokyo ** Stock Exchange released a survey of shareholders of listed companies, showing that the proportion of market funds held by individuals has rebounded to 176%, the highest since 2014.
Of course, what is more interesting at the moment is the sale of local Japanese banks and trusts, after all, as "indigenous" investors, they may have a deeper understanding of the bull market in Japanese stocks.