MARKETS SPECTATOR: A lucrative Japanese lunch

Australian-based traders have noticed, since the beginning of the month, that after midday global investors seem to be selling Australian shares, driving the market down from its intraday highs. Many traders suspect the money from such sales is being deployed into purchases of Japanese stocks.

Nomura, Japan’s biggest investment bank, reckons Chinese markets have been exerting more of an influence over Australia’s stock market with an outbreak of bird flu and speculation of Chinese monetary tightening to slam inflation that may have negative repercussions for China’s demand for Australian commodities.

Nevertheless, Japan’s broad Topix Index has surged more than 50 per cent since November 2012. The shares of the biggest publicly traded hedge fund, Man Group, surged 6.4 per cent yesterday, their biggest gain in 10 months. Man says it has been shorting the Japanese yen and was long Japanese stocks.

The Bank of Japan last week said it would print trillions of yen to pump money into its sluggish economy in a bid to keep interest rates low and spark faster growth. The BoJ’s quantitative easing policy is three times bigger than that of the US Federal Reserve relative to GDP, according to Perpetual’s Matt Sherwood.

That if nothing else may make Japanese stocks a favored destination in Asia-Pacific for a while longer.