For the first time in 17 years, Japan has raised interest rates. Juheng Buy Fund advises seizing this historical turning point to position investments in Japanese stock funds.

By admin Mar 20, 2024

The Bank of Japan has ended its negative interest rate policy and raised interest rates for the first time in 17 years, raising the benchmark interest rate from -0.1% to 0-0.1% and ending yield curve control and the purchase program for Japanese stock ETFs and REITs. Zhang Rongren, the General Manager of Juheng Buy Fund, pointed out that the performance of the Japanese stock market is heavily influenced by the US stock market and the Japanese yen. As long as the US stock market continues to rise and the Japanese yen does not appreciate significantly, Japanese stocks are expected to rise. Investors can seize this historical turning point to position investments in Japanese stock funds.

The research team at Juheng Buy Fund stated that while the Bank of Japan announced the end of stock ETF purchases, negative interest rates, and yield curve control, it emphasized that “in cases of a rapid increase in yields, the Bank of Japan will respond flexibly, such as increasing purchases of Japanese government bonds.” This indicates that the Bank of Japan is not willing to relax restrictions on short-term and long-term interest rates, and the only policies removed are the more extreme ones, such as buying stocks and the negative interest rate policy harming banks.

Zhang Rongren explained that the Bank of Japan’s statement regarding a possible increase in government bond purchases implies that there is still an unspecified upper limit for long-term government bond yields, and the Bank of Japan will not allow long-term interest rates to rise significantly. With ongoing upward revisions in the economic growth rate expectations in the US and a decrease in the potential number of interest rate cuts, there is a possibility of further widening the gap in long-term interest rates between the US and Japan. The strong US stock market and the weakening Japanese yen are expected to continue to boost Japanese stocks.

Furthermore, Zhang Rongren stated that in addition to the unchanging positive factors of the US stock market and the Japanese yen, the semiconductor demand driven by AI and the US’s increased focus on onshore production strategies are also favorable for Japanese stocks. He recommended that investors take advantage of Juheng Buy Fund’s zero commission promotion to allocate funds to Japanese stock funds and advised existing investors not to take profits too early.

By admin

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