BlackRock, which holds a highly confident investment view of the Japanese stock market, said that the Bank of Japan may maintain interest rates for a longer period of time to boost the Japanese stock market.

Yuichi Chiguchi, Chief Investment Strategist at the Japan branch of the world's largest asset management company, stated that although investors should be cautious of the potential risks of changes in the Bank of Japan's meetings this year, the Bank of Japan may need to wait until the end of 2024 to make a decision once the price trend has been determined, which may pave the way for the benchmark TOPIX index to reach new highs this year.

Chiguchi said, "We expect Japan to continue to maintain an easy environment." He added that this provides favorable conditions for companies and boosts the stock market even when real interest rates are still negative.

Investors in Japanese stocks, bonds, and yen were nervous about the Bank of Japan's policy decision on July 31st, and the market widely expected the Bank of Japan to reduce its bond purchase plan. In addition, the focus of the market's attention is on interest rates, but sources revealed that weak consumer spending has made the decision on whether to raise interest rates again next week more complicated.

BlackRock Investment Research stated in its mid-year outlook that the recovery of Japan's economy and the return of inflation "make its stock market one of our most bullish markets." Goldman Sachs recently raised its profit forecast for the Topix index, while HSBC Holdings increased its shareholding in the Japanese stock market and expressed similar positive views.

This is in sharp contrast to Schroder Investment, which downgraded the Japanese stock market to neutral last month due to rising import costs and the positive impact of a weaker yen on the stock market beginning to fade away. Schroder said this caused signs of deterioration in consumer and small business confidence.

However, Chiguchi believes that there is still greater room for the stock market to rise, as the Bank of Japan may adopt a cautious policy normalization attitude with the extension of electricity and natural gas subsidies for several months. He said this puts downward pressure on prices and makes it difficult for the central bank to judge inflation trends.

However, he pointed out that after the Bank of Japan and bond market participants met this month to formulate a reduction in purchase plan, the Bank of Japan may take some action at each meeting.

The end of decades of deflation in Japan has changed the mindset of companies, exchanges, and aggressive investors, all of whom are calling for more effective use of capital. This has driven the Topix index and the Nikkei 225 stock average index to set historical highs this year, despite the recent rapid rise of the yen, which has somewhat diminished the luster of the stock market.

Chiikuchi said that in Japanese stocks, companies in the technology industry are attractive because these companies are expected to benefit from the expansion of generative AI, an aging society, decarbonization efforts, and tensions between China and the United States. The strategist said this would include semiconductor-related stocks and electronic component companies.

Chiikuchi said that in Japanese stocks, companies in the technology industry are attractive because these companies are expected to benefit from the expansion of generative AI, an aging society, decarbonization efforts, and tensions between China and the United States. The strategist said this would include semiconductor-related stocks and electronic component companies.

Editor/Emily