In Shinzo Abe’s Japan, corporate profits and the stock market are surging while household income shrinks with the economy. Investors are acting like they expect the divergence to grow.
They plowed $776 million into securities tracking the Nikkei 225 (NKY) Stock Average and JPX-Nikkei Index 400 (JPNK400) last week, while pulling $417 million from exchange-traded funds following the broader Topix index, data compiled by Bloomberg show. The Nikkei 225, dominated by exporters with an average market value five times larger than Topix constituents that include small retailers, is the world’s second best-performing equity gauge since the central bank’s stimulus boost on Oct. 31 dragged the yen to a seven-year low.
Amundi Japan Ltd. and Mizuho Asset Management Co. say favorable prospects for Japan’s manufacturers amid unprecedented monetary easing contrast with a gloomy outlook for businesses reliant on domestic demand. Prime Minister Abe’s policies are doing less for a populace mostly employed at smaller companies as pay increases fail to keep pace with inflation, concerns that may be holding back the Topix. (TPX)
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