Japanese Stock Market Hits 7 Year High

After a surprise QE announcement on Friday Japanese stocks climbed to the highest level in seven years - up 8% in three days trading. But what will the long term effects be?

Emma Wall 5 November, 2014 | 4:53PM
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October was a bad month for Japanese equities. The Nikkei fell steadily from 16,374 at the end of September to just 14,532 three short weeks later.

It seemed the market had lost faith in Abenomics and the Nikkei was doomed to repeat the cycles of years past – six to 12 months of promising gains, followed by crashing losses. But just at the very last minute, the powers-that-be announced two big boosts for both the domestic economy and the market, sending stocks soaring on Friday afternoon.

The first surprise came in the form of another round of quantitative easing, confirming that the Bank of Japan would be bond buying in a bigger, badder way than before. Swiftly following that announcement was the news that the Japanese pension fund GPIF would be upping its allocation to domestic equities to 25% - equating to an estimated $2 trillion of investment.

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About Author

Emma Wall  is former Senior International Editor for Morningstar