Japan Prime Minister Shinzo Abe is running out of policy options to extend a rally that sent stocks to a six-year high, according to Goldman Sachs Group Inc.
Investors have largely factored in more share-buying by the nation’s $1.2 trillion Government Pension Investment Fund and further fiscal and monetary stimulus to counter the deepest economic contraction in five years, Kathy Matsui, chief Japan strategist at the brokerage, said in an interview in Tokyo on Sept. 19. Goldman Sachs cut Japanese equities to underweight for the next three months on Sept. 5, projecting the Topix index will slide 5.7 percent from yesterday’s close in the period.
After a world-beating 51 percent rally in 2013, Japanese stocks plunged in the first quarter of this year and then started to recover, with the Topix climbing 17 percent from an April 14 low. Matsui turned bearish on the measure’s short-term prospects just days before the index erased its loss for 2014. She had pared her price target on the gauge in March after raising it six times last year.
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