Equities, Japan loses strength in Asia
In the last month of trading, the Nikkei 225 lost more than four percentage points. After a long bull run, Japan’s main stock market is suffering from the changing monetary policy scenario and international uncertainties.
The chart above shows the evolution of the strength ratio between the main Japanese stock index and the MSCI Asia ex-Japan. We can see that from the beginning of 2024 the attitude changes and the ratio returns to the levels seen at the end of 2022. There are several reasons for the weakness of the Nikkei 225, including a change in the attitude of the central bank, which is preparing to raise interest rates further in the face of rising inflation. Economic growth remains weak and international uncertainties, including the threat of tariffs, are weighing on the coming quarters.
Looking at a shorter time span, last year, we can see the bearish trend that accompanied the indicator for most of 2024, the brief attempt at recovery between September and the end of the year, and the current new phase of weakness.
