It had to be something extraordinary
In a market trading at 30 times earnings at an all time high despite slowing growth, earnings, liquidity, and non performing loans in the banking sector north of 15 % there had to be another suspect, the last and latest buyer
In Japan the government is the largest single owner of ETF's, yes, equity exchange traded funds, and is pushing on every string imagineable to create inflation in a wind tunnel of gravity
The challenge for India is that though investment in Indian sovereign bonds is limited (good news) equity investments are only capped by willing sellers and over 40 % of the free float in Indian equity markets is held by foreign investors with large swaths of the rest in the hands of the President of India (PSU's)
Prices for Indian equities are not set inside the country rather out and now, clearly, in Tokyo
A concern for Indian investors should be that when the capital flow reverses it will owing to factors outside the country (international data, g3 central bank balance sheets, the us fed) but the impact on price will be magnified inside the country because increased selling will meet relatively little structural demand in a globally low volume and still immature capital market
The Japanese and ECB balance sheets (expanding dramatically) now rival the US Feds (peaking and being weaned)
And who can forget the Singh bothers Ranbaxy skullduggery selling to the Japanese with non disclosure of the pending USFDA penalties yet the Japanese concluded the transaction at 2x of a market price that had been depressed by the news
Option implied volatility on the nifty had declined into the single digits (roughly 50 % under historical average) in the july series with a complacency indicating that a firm dip buyer lurked
To wit
tora tora tora
The land of Abenomics is betting on Modinomics.
In a market trading at 30 times earnings at an all time high despite slowing growth, earnings, liquidity, and non performing loans in the banking sector north of 15 % there had to be another suspect, the last and latest buyer
In Japan the government is the largest single owner of ETF's, yes, equity exchange traded funds, and is pushing on every string imagineable to create inflation in a wind tunnel of gravity
The challenge for India is that though investment in Indian sovereign bonds is limited (good news) equity investments are only capped by willing sellers and over 40 % of the free float in Indian equity markets is held by foreign investors with large swaths of the rest in the hands of the President of India (PSU's)
Prices for Indian equities are not set inside the country rather out and now, clearly, in Tokyo
A concern for Indian investors should be that when the capital flow reverses it will owing to factors outside the country (international data, g3 central bank balance sheets, the us fed) but the impact on price will be magnified inside the country because increased selling will meet relatively little structural demand in a globally low volume and still immature capital market
The Japanese and ECB balance sheets (expanding dramatically) now rival the US Feds (peaking and being weaned)
And who can forget the Singh bothers Ranbaxy skullduggery selling to the Japanese with non disclosure of the pending USFDA penalties yet the Japanese concluded the transaction at 2x of a market price that had been depressed by the news
Option implied volatility on the nifty had declined into the single digits (roughly 50 % under historical average) in the july series with a complacency indicating that a firm dip buyer lurked
To wit
tora tora tora
The land of Abenomics is betting on Modinomics.
The demand is so strong that assets of Nomura Holdings Inc.’s India equity fund quadrupled to almost 400 billion yen ($3.6 billion) in just the past year. Japanese investors owned $13 billion of Indian stocks and bonds at the end of June, the most in data going back to 2012, according to India’s regulator.
“It’s not like we put in any special marketing effort for this fund,” said Kazuto Wada, an executive director at Nomura, Japan’s largest brokerage. “Investors are looking at where the growth will be in the medium to long term, without having to worry about short-term swings in the market.”
JAPAN suffered one of the biggest property market collapses in modern history. At the market's peak in 1991, all the land in Japan, a country the size of California, was worth about $18 trillion, or almost four times the value of all property in the United States at the time.
Then came the crashes in both stocks and property, after the Japanese central bank moved too aggressively to raise interest rates. Both markets spiraled downward as investors sold stocks to cover losses in the land market, and vice versa, plunging prices into a 14-year trough, from which they are only now starting to recover.
Now the land in Japan is worth less than half its 1991 peak, while property in the United States has more than tripled in value, to about $17 trillion.
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