Japan Stocks: What To Expect. Blackrock Investment Institute.

GM can examine the sensitivity of its stock return to fluctuations in the Yen-US Dollar exchange rate (and adjusting for market returns), assuming that market efficiency will account for Dollar-Yen fluctuations.

According to Mohammad Shehmir, JPMorgan Chase was expected to outperform the market after the Federal Reserve raised the interest rate, but its exposure in the Chinese economy has caused it quite a bit of trouble (Shehmir, 2016). JPMorgan Chase reported in its third-quarter a total of $16.3 billion in direct exposure to China (Maxfield, 2016). The economic situation in China is taking longer to settle down due to fears of institutional investors who are responsible for bulk trading. Retail investors have a strong influence over Chinese markets, therefore, the impact of a downward trend is intensified (Shehmir, 2016).

The United States stock market has experienced many interesting events this year, testing the nerves of millions of people around the world. The market started the year with the worst two-week performance in its history, creating a lot of uncertainty for the year to come. A severe decline in oil prices caused many firms within the energy industry to suffer. However, despite these negative events, gold saw its best quarter in 30 years, the market had a large reversal, and oil has been recovering. These volatile movements provided an amazing opportunity to make money for investors, relief for those who had holdings during this time, and a better outlook for firms. Two firms that have had an interesting year so far are ExxonMobil Corp. and Apple Inc. Exxon has experienced the effects of macroeconomic variables, while Apple has had some internal issues that lead to some stock price fluctuations.

As the world’s largest economy, every move the United States makes has widespread effects throughout the global markets. Around the world, there has been speculation of whether the U.S. will raise interest rates by the end of 2015. With all indications pointing to a rate increase, concerns have arisen about the potential ripple effects on the rest of the world. Fundamentally, raising interest rates come hand in hand with an appreciating U.S. dollar. In many parts of the world the U.S. Dollar is used as a major benchmark of current and future economic growth. For developed countries, a strong U.S. dollar can be viewed as positive, however emerging economies will face a different fate. As the world becomes more financially intertwined,

Geopolitical concerns remain at the forefront of issues that impact the economies of the Asian Pacific. A new investment survey released by Fitch Ratings in November of 2014 cites geopolitical risk as “a high risk to credit markets” continuing to criticize the effectiveness of Japan’s recent stimulus actions, often referred to as Abenomics. A staggering four out of five respondents or 79 percent cited geopolitical tensions as the most serious threat to the regions stability, up from a 15 percent previously surveyed in August 2013.

Financial Times reports the performance of global indices - S&P for Americas, FTST Eurofirst 300 for Europe and Nikkei 225 for Asia-Pacific region, plus, the Nikkei 225 is comprised of 225 stocks that are selected from the Japanese common stocks in the first section ranked by trading volume of the Tokyo Stock Exchange (Nikkei indexes, 2014). Therefore, the Nikkei 255 is considered to be a good proxy of the Japanese market capitalization ( Ugbede, Lizam, Kaseri & Idachaba, 2013).

On point, at its recent FOMC meeting, it reiterated that it would hold short-term interest rates near zero for a “considerable time.” This suggests to us that the Fed will first start raising rates by mid-2015, and even then will proceed slowly, so as not to disrupt the progress being made by the economy, overall. Also, with inflation staying below the Fed’s targets, the lead bank retains plenty of latitude on policy. Meanwhile . . .

More and more many researchers have accepted the economic relationship between the U.S. and Japan as a subject worthy of academic consideration and evaluation, especially considering the continuously decreasing trade deficit of the U.S. Many believe several factors play a role in the United States’ relationship with Japan including both microeconomic and macroeconomic factors. Some of these include savings and investment rates as well as industry structure, barriers to trade and even the value of Japanese yen compared to the U.S. dollar. Researchers disagree on which ones affect the United States trade deficit the most however, each can agree that more than one factor plays a part in the declining economic relationship between the U.S. and

Some of the things that will be on the forefront of investors’ minds as we enter 2014 will be fiscal and monetary policy, Janet Yellen, commodities, stocks, bonds, gold, Iran, China and Japan, just to name a few. Not to mention the likelihood of unforeseen issues that will need to be addressed as the year unfolds. We mention these items not to cause concern, but to elaborate on the scope of considerations that are a part of our ongoing process to construct an efficient portfolio capable of weathering a variety of economic and geopolitical storms.

Investors have seemingly maintained their appetite for risk-taking during 2017, but they appear not to be heeding the advice of investment strategists in terms of the likely sector beneficiaries of Trumponomics. This backdrop does not, however, imply that investors should be unaware of risks at this advanced stage of the economic expansion. US equities are not cheap when valued on an absolute basis, such as P/E multiples or price-to-sales. Meanwhile, the baseline outlook for Fed policy suggests 75 basis points being added to the federal funds target during 2018. The international backdrop for monetary policy is increasingly being characterised by the Bank of England and European Central Bank (ECB) starting to engage in a game of catch up with the Fed, albeit gradually. This would, therefore, suggest a higher likelihood of choppier conditions for global equity markets next year.

will push up the profits immediately even if it imperils the longer term. Buying and

We believe we couldn’t have chosen a more exciting period to begin this venture. The global economy is being affected by several circumstances that increase financial uncertainty. For instance, the price of oil is near all-time lows, which has put significant pressure on Emerging Markets that have high exposure to the swings in the price of petroleum (e.g. Venezuela, Mexico). Furthermore, a majority of financial experts and analysts suggest that Latin American markets will continue to decline. The US dollar has appreciated in the last few quarters while the Yen has depreciated due to deceleration of China’s economy. Commodities’ prices are very far from their all-time highs. The US Federal Reserve has decided to stop their Quantitative Easing policy and, therefore, increased the interest rates for the first time since 2006. Meanwhile, the yield of bonds continues to decrease, and

Tokyo market have been undermining with the help of reports of worries over global growth prospects and disappointing national

The Japanese will place more of their emphasis on investment in Asia, leaving less capital to finance United States budget deficits or to buy up American companies or open new factories. Japanese electronic goods and automobiles will not disappear from American shelves or showrooms, but increasingly they will come from factories in Asia, rather than in Japan or the United States (Sterngold, 2016, para.8).

Investment universe is more expansive, diverse and complex, with markets and securities reacting very differently to global forces