Gavekal Capital: Unprecedented QE is Not Lifting Stocks in Japan

Wednesday, April 23, 2014

Unprecedented QE is Not Lifting Stocks in Japan

Despite introducing by far the largest QE program of any central bank, the BOJ's unlimited quantitative and qualitative easing program is failing to have the desired effect on stocks. Indeed, the popular price-weighted Nikkei index is about 11% from it's recent high last December. More concerning, however, is the fact that the average stock is 19% from its 1 year high. This means that the average Japanese stock is just a stone's throw away from being in bear market territory.

In the below chart we show how far the average MSCI Pacific stock is from its 252-day high. In the table below that we show just the MSCI Japan and the sector breakdown.


MSCI Japan: