This year's "New Word / Buzzword Award" was announced on December 1st.
In terms of economics, "bad yen depreciation" entered the top 10.
The rapid depreciation of the yen pushed up prices and stagnated consumption.
This year, I think there were many occasions when the disadvantages of the yen's depreciation were discussed.
So what happened to the stock market?
There was a market that was different from past yen depreciation phases.
(Economic Department reporter Mitsutaka Saito)
The pattern of high stock prices due to the weak yen This year?
The depreciation of the yen boosts corporate earnings and raises stock prices.
Looking at the 20 years from 2002 to last year, there were seven years in which the yen weakened, but stock prices rose in those years without exception.
The shift from a weaker yen to higher stock prices is a composition that can be said to be a “win-win pattern” for the Japanese economy.
And this year, the yen depreciated to a record high.
The yen exchange rate, which was in the 115 yen range to the dollar at the beginning of the year, dropped to the 151 yen range to the dollar in late October.
The yen has weakened by more than 30 yen since the beginning of the year.
How was the company's performance?
When SMBC Nikko Securities analyzed the financial results for the six months from April to September for more than 1,400 companies listed on the former First Section of the Tokyo Stock Exchange, sales increased by 17% compared to the same period last year. Bottom line earnings were also up 4%, respectively.
The total amount of net profit exceeded 21 trillion yen, the highest level ever for the interim period.
The depreciation of the yen was the driving force.
The depreciation of the yen progresses in a way that exceeds the exchange rate assumed by companies, and this is pushing up corporate performance.
So what happened to the “win-win pattern” of the depreciation of the yen and the rise in stock prices?
This year's Tokyo stock market has a different flavor.
The rate of decline of the yen exchange rate against the dollar from the beginning of the year to the end of November reached 15%, but the Nikkei Stock Average fell 2.8% during this period.
Why are stock prices sluggish?
Japanese stocks are supposed to be undervalued from the perspective of foreign investors during the yen's depreciation, so why aren't stock prices rising?
First, stock prices are sluggish in major stock markets around the world, including the United States.
In Europe and the United States, interest rates have been raised one after another to curb inflation, and there is growing concern that this will lead to a slowdown in the global economy.
It has been pointed out that these global trends are also affecting the Tokyo market.
The second is foreign investors moving away from Japanese stocks.
According to the Japan Exchange Group, the net sales of Japanese stocks and futures by overseas investors from January to October this year totaled more than 4.4 trillion yen.
Rie Nishihara, Chief Equity Strategist at JP Morgan Securities, analyzes the reasons why foreign investors are cautious about buying Japanese stocks.
“Sales of Japanese companies have increased due to the weaker yen, but profits have been suppressed due to soaring raw material costs. It is seen as not rising.”
Will Japan Change?
I was very impressed by what a market insider pointed out as the reason why investment money from overseas has not been attracted to Japan.
It means that the figure that Japan will change is not shown.
“Among the past phases of yen depreciation and high stock prices, for example, the 2005 general election for the privatization of the postal services, and the 2013 Abenomics policy were announced as a concrete policy, and overseas investors have changed Japan. However, even when I talk with overseas investors, I hear that they have not seen anything that will generate expectations in the current phase of the yen's depreciation.
" There are signs that stock prices are picking up recently as fears about continuing interest rate hikes have eased.
Will 2022 be a year in which Japan's financial markets continue to experience a depreciation of the yen and share prices, which has not occurred in 20 years, and that the "bad yen depreciation" has spread to the stock market?
Or will it be corrected to a “win-win pattern” of weaker yen and higher stock prices?
“How will Japan change?” This is the key point that will influence the direction of the market.
attention schedule
The US monetary policy meeting to be held on the 13th and 14th of this month will focus on whether the range of interest rate hikes will be reduced, but it will be interesting to see what the market will do next week.
Also, attention is being paid to what kind of response will be taken in China, where large-scale protests against the zero corona policy have occurred.