The rally in Japanese shares after the central bank unexpectedly added to stimulus last week won’t last as long as those that followed previous monetary-policy surprises, according to Barclays Plc.
The last three times the Bank of Japan shocked the market, when it started quantitative easing in 2001, adopted a price target in 2012 and decided on unprecedented stimulus last year, the Topix index outperformed the Standard and Poor’s 500 Index for about 50 days, according to Barclays chief Japan equity strategist Hajime Kitano. The rally will to be shorter this time as investors are more skeptical about the BOJ’s ability to reach its inflation goal, he said.
“The BOJ said monetary policy will boost inflation expectations the last time, but we all know that didn’t yield substantial results,” Kitano said by phone Nov. 5. “So investors are going to question its ability to raise them this time. The unbridled hope we saw before has gone.”