Possible bear market rally in Nikkei fueled by domestic buyers, foreign investors cautious

From Investing.com: 2024-08-15 02:27:26

A bear market rally in Japanese stocks was possible, according to JPMorgan analysts, with foreign investors remaining cautious. Both the Nikkei and Topix indexes fell over 20% into bear market territory last week before rebounding sharply, driven mainly by domestic investors. Foreign investors have not yet re-entered the market, raising doubts about the sustainability of the rebound.

Despite the rebound, JPMorgan analysts warned that it could be a temporary bear market rally, as foreign investors have not returned to Japanese markets. Strong domestic buying and dip purchases have lifted the market, but the absence of foreign investors raises concerns about the market’s ability to hold and sustain the rebound.

Foreign investors have remained on the sidelines, with minimal buying focused on defense and banks amid expectations of higher interest rates. The Bank of Japan’s hawkish stance in July, including interest rate hikes and future increases, has further dampened sentiment in Japanese markets. Positive economic data provides the BOJ room to raise rates.

Overall, the bear market rally in Japan is fueled by domestic buyers, with foreign investors staying cautious. The sustainability of the rebound remains uncertain as doubts persist about the market’s ability to hold without significant foreign investment. The BOJ’s hawkish signals and strong economic data add to market uncertainty and volatility.



Read more at Investing.com: Nikkei bear market rally possible with foreign investors still wary- JPM By Investing.com