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Japan: The Emerging Hotspot for Global Asset Allocation

04 Sep 2023

This year has seen persistent uncertainty in the global economy. With the U.S. Federal Reserve upholding a high-interest rate policy to mitigate inflation, combined with ambiguous indicators of China's economic rebound, many international investors are setting their sights on Japan. Their burgeoning interest has bolstered the Japanese stock market, with economic indicators like Japan's GDP and inflation showing encouraging signs. Recently, Goldman Sachs shared their perspective, stating, "We are adjusting our forecast for the yen downwards. Should the Bank of Japan retain its dovish policy stance, we might see the yen dipping to 155 against the US dollar in the coming six months—a level not witnessed since June 1990." Interest rate experts, including Kamakshya Trivedi, believe that if the Bank of Japan sustains its low-interest rates and the stock market remains buoyant, the yen will likely continue its decline. A brighter growth outlook in the US could further weigh on the yen.


But what's behind Japan's "stock-currency divergence"?


How can the global asset allocation sector, which we're keenly observing, capitalize on this?

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