Risky Play on Japan Stocks

Hedge funds are playing with fire as they turn short on Nikkei futures for the first time in two years, according to one analyst, noting Japan’s public pension fund is ready to buy the dip.

“Shorting the Nikkei can be risky because the government pension fund and the Bank of Japan (BOJ) are effectively providing a floor to prices,” said BNP Paribas Chief Japan Equity Strategist Shun Maruyama. “It’s a very dangerous strategy for the hedge funds.”

Hedge funds had been long on Nikkei futures for two years and helped fuel a near 60 percent rally, but that changed in January. “Doubts about the huge Bank of Japan injections led hedge funds to turn net short,” Societe Generale equity strategist Arthur van Slooten said in a note last week.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.