Records, like rules, were made to be broken and the Nikkei is one session away from breaking a record.
On Friday, the benchmark rose for a 14th consecutive day ahead of elections on Sunday:
As Bloomberg notes, “foreign investors bought a net 657.5 billion yen ($5.8 billion) of stocks in the first week of October, the most in 2 1/2 years, and some 1.32 trillion yen overall over the past three weeks as of Oct. 13.”
That, after nine straight weeks of net sales going back to July. Here’s the chart:
It’s worth noting that this has become somewhat detached from the yen, a phenomenon which we and others remarked on earlier in the year:
With the elections not expected to upset any apple carts and with the fundamental backdrop (earnings and the economy) looking brighter, there’s reason to believe this can continue.
One thing worth noting: given that foreigners were net sellers for 9 consecutive weeks going into October, and given that, as Bloomberg also notes, retail investors sold a net 1.7 trillion yen in equities over the five-week stretch ended Oct. 13, there’s a certain extent to which this has been propped up by Kuroda.
As of yesterday, the BoJ owns a cartoonish 16 trillion yen worth of stocks. So I guess there’s an argument to be made that if retail investors get interested again, lured as they’re prone to, by headlines about record winning streaks, and if foreign money continues to come in, there’s no stopping the rally. Further, the Nikkei has actually lagged the MSCI Asia Pacific ex-Japan.
But that brings us back to the same old question: is the target for these benchmarks now just “infinity”?