The European Central Bank’s (ECB) Japan-style quantitative easing (QE) program is just the trigger needed to put the sputtering Nikkei rally back on track, say Tokyo stock strategists.
“Money will be freed up to flow into equities and some of that will come into Japanese shares,” said Nomura equity strategist Masaki Motomura. And, with a weaker yen expected to boost recurring operating profit at Japanese companies, the Nikkei is headed to the 18,000 level by March, he said. The Greece election may have sparked a decline on Monday, but the results do not fundamentally change Nomura’s position that Japan stocks are set for a rally.
The ECB last Thursday pledged to buy 60 billion euros ($70 billion) worth of private and public bonds each month until September 2016 in a program that could amount to 1.1 trillion euros, surpassing market expectations.